Problem 14-15 (AA Annual rental parable atthe end of ince term an uefl if of machinery Cost ofequipment Residual valuesonguaranteed Implicit inenest rate DV ofan ordinary annuity oat 12% for 5 periods PVof Tat 12% for S periods igheend of the lense erm the equipment wil eer ‘The entity incurred initial direct cost of P200,000 infin the Tease agreement, ine 1. What is the gross investment in the Tease? a. 7,500,000 B) 8000000 ©. 4,000,000 a. 4)500;000 2 What is the net investment in the lease? a. 5,400,000 1B 5,685,000 ©. 4,000,000 4. 33500,000 3. What interest incom: Jultf interest income should be reported for current (@ 682,200 b. 618/000 900, . 960,000, 466 problem 14-16 (IAA) pizza Company used leases as a method of selling product, in the current year, Rizza Company completed construction of machinery. [at the beginning of current year, the machinery was leased aia contract specifying that ownership of the machinery ‘/ will transfer to the lessee at the end of the lease pericd. The annual lease payments do not include exeeutory eos. ‘original coat ofthe machinery Ean Ceetpayments payable stbepinningofesch year 2,000,000 Bitimated residual value oom Implicit ntorest rate a Lense term Abyear. Present value ofan annuity due of at 12% for 10periods os 0m Present value of Lat 12% fo 10 periods LL What is the total financial revenue over the lease term? a. 8,840,000 ch. 7,340,000 e. 8,020,000 4. 6,840,000 2, What amount should be reported as gross profit on sale? a. 3,980,000 (© 3,660,000 @. 7,840,000 = a. 81020,000 3, What is the interest income for current year? a. 1,557,600 A b. 1,817,600 rebee > © 1.279.200 1 (1,619,200