Alicia Inc. leased a machinery to Hannah & Co. on January 1, 2020. Lease term is 8 years. Annual rental is P800,000 payable at the beginning of each year starting January 1, 2020. Carrying value of the underlying asset on Alicia’s books is 3,200,000. The lease contract is recorded appropriately as a sales-type lease and has an implicit interest rate of 12%. Alicia normally sells these machineries to customers at a selling price of 4,200,000. How much is Alicia’s gross profit on January 1, 2020? a. None b. 1,000,000 c. 1,251,005 d. 1,400,000
Alicia Inc. leased a machinery to Hannah & Co. on January 1, 2020. Lease term is 8 years. Annual rental is P800,000 payable at the beginning of each year starting January 1, 2020. Carrying value of the underlying asset on Alicia’s books is 3,200,000. The lease contract is recorded appropriately as a sales-type lease and has an implicit interest rate of 12%. Alicia normally sells these machineries to customers at a selling price of 4,200,000. How much is Alicia’s gross profit on January 1, 2020? a. None b. 1,000,000 c. 1,251,005 d. 1,400,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Alicia Inc. leased a machinery to Hannah & Co. on January 1, 2020. Lease term is 8 years. Annual rental is P800,000 payable at the beginning of each year starting January 1, 2020. Carrying value of the underlying asset on Alicia’s books is 3,200,000. The lease contract is recorded appropriately as a sales-type lease and has an implicit interest rate of 12%. Alicia normally sells these machineries to customers at a selling price of 4,200,000. How much is Alicia’s gross profit on January 1, 2020?
a. None
b. 1,000,000
c. 1,251,005
d. 1,400,000
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