On January 1, 2010, Nueva company, acting as a lessor, leased an equipment for ten years at annual rental of P1,200,000, payable by Caster Company, the lessee, at the beginning of each year. The equipment had a cost and a fair market value of P8,400,000 with an estimated life of 12 years and no residual value. Nueva uses the straight line depreciation. The implicit rate is 9%. What amount of income should be reported in 2010 by Nueva if the lease was accounted for ass a direct financing lease? a. 500,000 b. 648,000 c. 756,000 d. 360,000

On January 1, 2010, Nueva company, acting as a lessor, leased an equipment for ten years at annual rental of P1,200,000, payable by Caster Company, the lessee, at the beginning of each year. The equipment had a cost and a fair market value of P8,400,000 with an estimated life of 12 years and no residual value. Nueva uses the straight line depreciation. The implicit rate is 9%. What amount of income should be reported in 2010 by Nueva if the lease was accounted for ass a direct financing lease? a. 500,000 b. 648,000 c. 756,000 d. 360,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...

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