Pizzicato Co. a dealer, leases a brand-new machine to Prestissimo, Inc. The machine is classified as inventory in Pizzicato’s books and has a carrying amount of P1,500,000. The useful life of the...

Pizzicato Co. a dealer, leases a brand-new machine to Prestissimo, Inc. The machine is classified as inventory in Pizzicato’s books and has a carrying amount of P1,500,000. The useful life of the machine is 5 years. The lease term is 4 years and the annual rent, due at the beginning of each year, is P600,000. Pizzicato Co. incurred direct cost O P20,000 in negotiating the lease. The market rate of interest is 10%. The machine reverts back to Pizzicato at the end of the lease term, at which time the machine is expected to have a residual value of P180,000. Pizzicato accounts for the lease sale type lease.

What amounts for the following should Pizzicato Co. report in Year 1 of the lease assuming the residual value is guaranteed?

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  a
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

  Sales	Cost of Sales	Net Selling profit	Interest income	Net investment, end
  2,215,053.00	1,500,000.00	695,053.00	161,505.00	1,776,558.00

  
  

  
  

  a , Sales Cost of Sales Net Selling profit Interest income Net investment, end         2,215,053.00         1,500,000.00            695,053.00            161,505.00              1,776,558.00 ,

  
  
  
  


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  b.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

  Sales	Cost of Sales	Net Selling profit	Interest income	Net investment, end
  2,215,053.00	1,500,000.00	715,053.00	161,505.00	1,776,558.00

  
  

  
  

  b.  , Sales Cost of Sales Net Selling profit Interest income Net investment, end         2,215,053.00         1,500,000.00            715,053.00            161,505.00              1,776,558.00 ,

  
  
  
  


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  c.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

  Sales	Cost of Sales	Net Selling profit	Interest income	Net investment, end
  2,092,111.00	1,500,000.00	592,111.00	161,505.00	1,776,558.00

  
  

  
  

  c.  , Sales Cost of Sales Net Selling profit Interest income Net investment, end         2,092,111.00         1,500,000.00            592,111.00            161,505.00              1,776,558.00 ,

  
  
  
  


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  d.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

  Sales	Cost of Sales	Net Selling profit	Interest income	Net investment, end
  2,092,111.00	1,377,058.00	592,111.00	161,505.00	1,776,558.00