Reference no: EM132955556
Question - Angel Company entered into a finance lease on January 1, 2018. The lessee guaranteed the residual value of the asset under the lease estimated to beP1,200,000 on January 1,2023,the end of the lease term.
Annual lease payments are P1,000,000 due each December 31, beginning December 31, 2018. The last payment is due December 31,2022.
The remaining useful life of the asset was six years at the commencement of the lease.
Both the lessor and the lessee used 10% as the interest rate. The PV of 1 at 10% for 5 periods is .62, and the PV of an ordinary annuity of 1 at 10% for 5 periods is. 3.79.
1. What is the net lease receivable of the lessor at the commencement of the lease?
2. What is the gross investment in the lease?
3. What is the total unearned interest income?
4. What is the interest income for 2018?
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