What is balance of Lessor net receivable and lease liability

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Question - On January 1, 2019, EE Inc. (Lessor) Leased a machineto a FF Co. (Lessee). The machine had an original cost of P6,000,000. The lease term is 5 years and the implicit interest rate on the lease is 15%. The lease is properly classified as a direct financing lease.

The annual lease payments of P1,730,541 are made each December 31. The machine reverts to Lessor at the end of the lease term, at which time the residual value is unguaranteed.

The PV of 1 at 15% for 5 periods is .4972, and the PV of an ordinary annuity of 1 at 15% for 5 periods is 3.3522.

At the commencement of the lease on January 1, 2019, what is balance of Lessor's net receivable and lease liability?

Reference no: EM132544452

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