Vanderbilt Company is a dealer in machinery. On January 1, 2010 machinery was leased to another enterprise with the following provisions: Annual rental payable at the end of each year, 3,000,000 Lease term and useful life of machinery, 5 years Cost of machinery, 8,000,000 Residual value-unguaranteed, 1,000,000 Implicit interest rate, 12% PV of an ordinary annuity of 1 for 5 periods at 12% 3.60 PV of 1 for 5 periods at 12% 0.57 At the end of the lease term on December 31, 2010, the machinery will revert to Vanderbilt. The perpetual inventory system is used. Vanderbilt incurred initial direct cost of P300,000 in finalizing the lease agreement. What is the total financial revenue from the lease? a. 4,630,000 b. 4,200,000 c. 5,200,000 d. 3,630,000

Vanderbilt Company is a dealer in machinery. On January 1, 2010 machinery was leased to another enterprise with the following provisions: Annual rental payable at the end of each year, 3,000,000 Lease term and useful life of machinery, 5 years Cost of machinery, 8,000,000 Residual value-unguaranteed, 1,000,000 Implicit interest rate, 12% PV of an ordinary annuity of 1 for 5 periods at 12% 3.60 PV of 1 for 5 periods at 12% 0.57 At the end of the lease term on December 31, 2010, the machinery will revert to Vanderbilt. The perpetual inventory system is used. Vanderbilt incurred initial direct cost of P300,000 in finalizing the lease agreement. What is the total financial revenue from the lease? a. 4,630,000 b. 4,200,000 c. 5,200,000 d. 3,630,000

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

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

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