.Happy Company leased a piece of equipment to Great Company on April 1, 2021. The lease is appropriately recorded as a sale by Happy. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021. The cost of the equipment to Happy is P840,000. The equipment has an estimated useful life of 10 years with an unguaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to Happy Company. The interest rate implicit in the lease is 10%. How much is Happy Company's cost of sales as a result of the foregoing? (Use four decimal places)
.Happy Company leased a piece of equipment to Great Company on April 1, 2021. The lease is appropriately recorded as a sale by Happy. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021. The cost of the equipment to Happy is P840,000. The equipment has an estimated useful life of 10 years with an unguaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to Happy Company. The interest rate implicit in the lease is 10%. How much is Happy Company's cost of sales as a result of the foregoing? (Use four decimal places)
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
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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