What abe company should recognize rent receivable at

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Question 1: To raise operating funds, National Distribution Company sold its equipment on March 31,2015 for P470,000 and immediately leased the equipment back. The fair value of the asset is P700,000 and the equipment has a carrying value of P650,000. The annual rental payments of P100,000 is significantly lower than the fair rental of P125,000 for this type of equipment.

How much loss should be deferred beyond 2015 as a result of this sale lease back transaction?

Question 2: 13. Abe Company, lessor, leases its equipment under an operating lease. The lease term is 5 years and the lease payments are made in advance on January 1 of each year as shown in the following schedule:

January 1, 2005 1,000,000

January 1, 2006 1,000,000

January 1, 2007 1,400,000

January 1, 2008 1,700,000

January 1, 2009 1,900,000

On December 31, 2006, Abe Company should recognize rent receivable at

Reference no: EM132578934

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