No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

LEASES – IFRS 16
PART 1: OPERATING LEASE - LESSOR

 Lessors shall classify all leases either as operating or finance leases. This treatment does
not apply to lessee’s under IFRS 16 and can only use the Finance Lease Model. Finance and
Operating leases are defined as follows:

(a) Finance leases transfers substantially all the risks and rewards incidental to ownership of
an underlying asset.
(b) Operating leases are leases other than a finance lease.

 Under an Operating Lease the lessor shall recognize lease or rental income using the
straight-line method over the lease term.

(a) If the rentals are uneven (increasing or decreasing) or there is a period where rentals are
not paid by the lessee as a form of marketing. The total amount of rentals to be received
is computed and divided equally over the lease term. Accordingly, lease or rent receivable
will be recognized for the difference between the income and collection

(b) Contingent rentals (rentals based on some future amount) are recognized as additional
income by the lessor under accrual accounting.

(c) Lease bonuses received should be deferred as a liability and amortized as additional
rental income over the lease term. The same treatment is applied to nonrefundable
security deposits.

Note that If the problem is silent, the security deposit is refundable and treated as a long-
term liability.

(d) Initial direct cost incurred by the lessor is capitalized as part of the carrying amount of
the leased asset and amortized as expense over the lease term.

(e) The depreciation on the asset and other expenses related to the ownership of the asset
like insurance and taxes shall be recognized as an expense by the lessor.

MULTIPLE CHOICE PROBLEMS

1. On January 1, 2021, Axelrod Company signed a 3-year operating lease for office space at
P2,500,000 per year with a lessee. The lease included a provision for additional rent of 10%
of the annual lessee’s sales that exceeds P15,000,000. The lessee’s sales for the year ended
December 31, 2021 were P18,000,000.

Upon execution of the lease, Axelrod received P1,200,000 as a bonus for the lease in order
to grant a longer 4-year lease instead of the lessor’s usual lease term of 2 years. What is
Axelrod’s rent income for the year ended December 31, 2021?
a. 2,500,000
b. 3,400,000
c. 3,150,000
d. 3,100,000

1|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

2. As an inducement to enter a lease, Thea Company, a lessor, grants Custard Company, a

lessee, nine months of free rent under a five-year operating lease. The lease is effective on
January 1, 2021, and provides for monthly rental of P250,000 to begin October 1, 2021.

1. What is the rental income for the year ended December 31, 2021?
a. 3,000,000
b. 2,700,000
c. 2,550,000
d. 750,000

2. What is the rent receivable for the year ended December 31, 2022?
a. 4,350,000
b. 1,800,000
c. 1,350,000
d. 2,450,000

3. On January 1, 2021, Grey Company leased a building from Bork Company under a 3-year
operating lease. The total rent for the lease term will be P13,200,000, payable for the first 12
months at P250,000 per month, the second 12 months at P350,000 per month and the 3rd and
last 12 months at P500,000 per month. Rental payments are received at the beginning of each
month.

All payments were made when due. Bork’s reporting date is every December 31.

1. What is the amount of rental revenue that shall be reported by Bork in 2021?
a. 4,400,000
b. 3,000,000
c. 4,200,000
d. 6,00,0000

2. What is the rental receivable for the interim period ending June 30, 2022?
a. 900,000
b. 1,200,000
c. 1,600,000
d. 1,500,000

4. On January 1, 2021, Splash Company leased a building to Palace Company under an

operating lease for four years at P5,000,000 per year, payable the first day of each lease year.
Splash paid P1,000,000 to a real estate broker as a finder’s fee. The building is depreciated
P500,000 per year. For 2021, Splash incurred property tax expense totaling P300,000. What
is the net rental income for 2021?
a. 4,000,000
b. 3,200,000
c. 5,000,000
d. 3,950,000

5. Brinkley Company purchased a new machine for P5,000,000 on January 1, 2021 for the
purpose of leasing. The machine has an estimated 10-year life. On April 1, 2021, Brinkley
leased the machine to Supremacy Company for three years at a monthly rental of P300,000.
Supremacy Company paid the rental for one year of P3,600,000 on April 1, 2021 and
additionally paid P600,000 to Brinkley as a lease bonus to obtain the three-year lease. On
April 1, 2021, Brinkley incurred initial direct costs of P240,000. What is Brinkley’s 2021
operating profit on this leased asset?
a. 2,290,000

2|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

b. 2,415,000
c. 2,110,000
d. 2,740,000

PART 2: FINANCE LEASE - LESSEE

Terms and Definitions

Lease - a contract or part of a contract that conveys the right to use an asset (the
underlying asset) for a period of time in exchange for consideration.

Interest rate The interest rate that yields a present value of (a) the lease payments and
implicit in the (b) the unguaranteed residual value equal to the sum of (i) the fair value
lease - of the underlying asset and (ii) any initial direct costs of the lessor.

Lease term - The non-cancellable period for which a lessee has the right to use an
underlying asset, plus:
a) Periods covered by an extension option if exercise of that option by
the lessee is reasonably certain; and
b) Periods covered by a termination option if the lessee is reasonably
certain not to exercise that option

Lessee’s The rate of interest that a lessee would have to pay to borrow over a
incremental similar term, and with a similar security, the funds necessary to obtain an
borrowing rate - asset of a similar value to the right-of-use asset in a similar economic
environment.

Inception date of The earlier of the date of a lease agreement and the date of commitment
the lease - by the parties to the principal terms and conditions of the lease.

Commencement The date on which a lessor makes an underlying asset available for use
date - by a lessee.

Underlying asset An asset that is the subject of a lease, for which the right to use that asset
- has been provided by a lessor to a lessee.

Lease Payments made by a lessee to a lessor relating to the right to use an

payments - underlying asset during the lease term, comprising the following:

a) Fixed payments, less any lease incentives;

b) Variable lease payments that depend on an index or a rate;
c) The exercise price of a purchase option if the lessee is
reasonably certain to exercise that option;
d) Residual value guarantees; and
e) Payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising an option to terminate the lease.
Lease incentives Payments made by a lessor to a lessee associated with a lease, or the
- reimbursement or assumption by a lessor of costs of a lessee.

Initial direct costs Incremental costs of obtaining a lease that would not have been incurred
- if the lease had not been obtained, except for such costs incurred by a
manufacturer or dealer lessor in connection with a finance lease.

Economic life - Either the period over which an asset is expected to be economically
usable by one or more users or the number of production or similar units
expected to be obtained from an asset by one or more users.

3|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

Short term leases A lease that, at the commencement date, has a lease term of 12 months
- or less. A lease that contains a purchase option is not a short-term lease.

Unguaranteed That portion of the residual value of the underlying asset, the realization
residual value - of which by a lessor is not assured or is guaranteed solely by a party
related to the lessor.

Identifying a Lease

At inception of a contract, an entity shall assess whether the contract is, or contains, a
lease

 A contract is, or contains, a lease if it conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.

 To assess whether a contract conveys the right to control the use of an identified asset for
a period of time, an entity shall assess whether, throughout the period of use, the customer
has both of the following:

a) The right to obtain substantially all of the economic benefits from use of the identified
asset; and

b) The right to direct the use of the identified asset

 If the customer has the right to control the use of an identified asset for only a portion of
the term of the contract, the contract contains a lease for that portion of the term.

Lessee

 Lessees now have a single accounting model for all leases except for

(a) Short-term leases (those having a term of 12 months or less, including the effect of
extension options); and

(b) Leases for which the underlying asset is of low value (telephones, laptop computers,
and small office furniture).

 Initial Recognition – Capitalize the (a) Right-of-Use Asset and measure a (b) Lease
Liability at the present value of lease payments.

(a) The cost of the right-of-use asset is the total of:

 The amount of the lease liability recognized;

 Any lease payments made at or before the commencement date, less any lease
incentives;
 Any initial direct costs incurred; and
 An estimate of costs to be incurred to dismantle and remove an asset and restore
the site based on the terms and conditions of the lease.

(b) The lease liability at the commencement date of the lease shall be the discounted
unpaid portion lease payments computed using the implicit rate in the lease or if not
determinable, the lessee’s incremental borrowing rate. Lease payments include

 Fixed payments, less any lease incentives receivable;

 Variable lease payments dependent on an index or rate;
 Residual value guarantees;
 The exercise price of a reasonably certain purchase options; and

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

 Lease termination penalties, if a lessee termination option was considered in

setting the lease term.

Subsequent Measurement

(a) The Right-of-Use Asset shall be presented as a line item in the statement of
financial position as part of non-current assets separately from other assets or within
the same line item as the underlying asset and accounted for using any of the
following:

 Apply PAS 16, Property, Plant and Equipment under the Cost Model and
depreciate the Right-of-Use asset using its economic life if there is a transfer of
ownership or a purchase option that is reasonably certain to be exercise. However,
if there is none, the Right-of-Use Asset is depreciated using economic life or the
lease term whichever is shorter.

 Revaluation Model also under PAS 16.

 Apply PAS 40, Investment property if the Right-of-Use asset meets the definition
of an investment property. The lessee shall apply the Fair Value Model if it applies
that model to its investment property.

(b) The Lease Liability after commencement shall be “remeasured” for:

 Increases in the carrying amount due to the interest on the liability using the
effective interest method.

 A reduction in the carrying amount as a result of the lease payments made.

 The carrying amount is remeasured to reflect any reassessment, lease

modifications or revised in-substance fixed lease payments.

 Lease payments to be applied to the lease liability that are due within 12 months
after the reporting period shall be classified as a current liability in the statement of
financial position.

 Remeasurements of lease liability and the Right-of-Use Asset shall be

necessary to reflect the following changes:
(a) The lease term
(b) An assessment of a purchase option
(c) The amounts expected to be payable under residual value guarantees
(d) Future lease payments resulting from a change in an index or a rate used to
determine those payments

 Variable lease payments that have not been included in the initial measurement
of the lease liability are recognized in profit or loss in the period in which the event
or condition that triggers the payments occurs.

5|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

PROBLEMS

1. La Salle Company leased equipment from Walsh Company on January 1, 2021 under a lease
with the following pertinent information:

Annual rental payable at the beginning of each year 600,000

Lease term 7 years
Useful life of equipment 10 years
Implicit interest rate 12%
PV of an ordinary annuity of 1 for 7 periods at 12% 5.11
Present value of 1 for 7 periods at 12% 0.45

La Salle has the option to purchase the machine on December 31, 2027 by paying P1,000,000
which is significantly less than the expected fair value of the machine on the option exercise
date.

On January 1, 2021, La Salle paid the annual rental and a lease bonus of P150,000 which
was net of the lease incentive received of P100,000. The bonus would have been P250,000
if the incentive was not granted.

La Salle also incurred initial direct costs of P84,000. La Salle uses the straight-line method of
depreciation for all its assets with no expected residual value. What is the balance of the
lease liability on December 31, 2021?
a. 3,337,920
b. 2,916,000
c. 3,265,920
d. 2,665,920

2. Jalen Company leased equipment for its entire nine-year useful life, agreeing to pay
P1,000,000 end of each year on December 31, 2021, and P1,000,000 annually on each
December 31, for the next eight years. The present value on January 1, 2021, of the nine
lease payments over the lease term, using the rate implicit in the lease which Jalen knows
to be 10% was P5,759,000. The January 1, 2021, present value of the lease payments using
Jalen’s incremental borrowing rate of 12% was P5,328,000. Jalen made a timely second
lease payment in 2022. What is the current lease liability on December 31, 2021?
a. 496,736
b. 466,510
c. 503,264
d. 533,490

3. On January 1, 2021, Covert Company leased two automobiles for executive use. The lease
requires Covert to make five annual payments of P1,500,000 beginning January 1, 2021. At
the end of the lease term at December 31, 2025, Covert guarantees the residual value of the
automobiles at P1,000,000. The interest rate implicit in the lease is 11% and present value
factors are as follows:

For an annuity due with 5 payments 4.10

For an ordinary annuity with 5 payments 3.70
Present value of 1 for 5 periods 0.59

1. What is the finance lease liability immediately after the first required payment?
a. 4,640,000
b. 6,140,000
c. 4,316,400

6|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

d. 5,240,000

2. What is the 2022 interest expense?

a. 463,800
b. 581,640
c. 569,600
d. 474,804

4. On January 1, 2021, Alicia Company entered into a 10-year lease for drilling equipment. Alicia
accounted for the acquisition as a finance lease for P4,900,000 which included the present
value of a P200,000 guaranteed residual value. At the end of the lease, the asset will revert
back to the lessor. It is estimated that the asset’s fair value at the end of its 12-year useful
life will be P100,000. Alicia regularly uses the straight-line depreciation on similar equipment.

1. What amount should Alicia recognize as depreciation expense on the leased asset?
a. 490,000
b. 400,000
c. 470,000
d. 408,333

2. If the total amount capitalized as an asset is P4,900,000 but the residual value of P200,000
is unguaranteed, what is the depreciation to be recorded in 2019?
a. 490,000
b. 400,000
c. 470,000
d. 408,333

PART 3: SALE AND LEASEBACK TRANSACTIONS

(a) A sale and leaseback is a transaction where the seller sells an asset to a buyer and
immediately leases back the asset, therefore the seller becomes the lessee and the buyer
becoming the lessor.

(b) PFRS 15 is applied to determine whether the transfer of an asset is accounted for as a
sale.

(c) If an asset transfer satisfies PFRS 15’s requirements to be accounted for as a sale the
seller/lessee measures the right-of-use asset at the proportion of the previous carrying
amount based on the fair value that relates to the right of use retained.

(d) The following procedures shall be considered for amounts to be recognized as the “RIGHT
OF USE ASSET” and amount of “GAIN OR LOSS ON RIGHT OF USE TRANSFERRED”.
Take note that it is not a gain or loss on sale that shall be recognized by the seller.

 If the selling price is at or equal to fair value the sale transaction is at arm’s length.

 If the selling price is above fair value, the difference shall be treated as “additional
financing” that is treated as a lease incentive received and therefore deducted from
the lease liability and other capitalizable cost like initial direct cost, lease
prepayment and present value of dismantling, removal and restoration in
computing for the total cost of the right of use asset.

7|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

 If the selling price is below fair value, the difference shall be treated as a lease
prepayment and therefore added in computing for the total cost of the right of use
asset.

 The proportion of the previous carrying amount that relates to the “right of use
retained” is computed by dividing the carrying amount of the asset by its fair value.

 Meanwhile it is also necessary to compute for the right of use transferred percentage.
This is accomplished by deducting from 1 of 100% the right of use retained
computed from the proportion of the carrying amount of the asset sold as it relates to
its fair value.

 Meanwhile the total gain or loss on right of use transferred is the difference between
the fair value of the asset and the total cost of the right-of-use asset.

 The right of use asset capitalized is the total cost of the leased asset multiplied by
“right of use retained” percentage.

 The gain or loss on the right of use transferred to be recognized by the seller/lessee
is the “total right of use transferred” multiplied by the percentage of right of use
transferred.

 The percentage of the right of use transferred can also be computed by dividing the
gain or loss on sale by the fair value of the asset.

COMPREHENSIVE PROBLEM

1. On January 1, 2021 Claire Company sold equipment with an estimated remaining useful life of
12 years to Danes Company. At the same time, Claire leased back the equipment for 5 years.
The lease does not contain a purchase option and the equipment will revert back to Claire at
the end of the lease term. At the same time the residual value is unguaranteed and considered
insignificant.

Additional information regarding this sale and leaseback transaction is as follows:

Sales price and fair value 16,000,000

Carrying amount 12,000,000
Lease payments in advance 2,000,000
Implicit rate 12%
PV of an ordinary annuity 3.60
PV of an annuity due 4.04

1. What is the cost of the right of use asset?

a. 6,810,000
b. 8,080,000
c. 6,060,000
d. 6,080,000

2. What is the gain on the right of use transferred from the sale?
a. 1,980,000
b. 1,930,000
c. 1,730,000

8|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

d. 2,180,000

2. On January 1, 2021 Robbie Company sold equipment with an estimated remaining useful life
of 12 years to Grace Company. At the same time, Robbie leased back the equipment for 5
years. The lease does not contain a purchase option and the equipment will revert back to
Robbie at the end of the lease term. At the same time the residual value is unguaranteed and
considered insignificant.

Additional information regarding this sale and leaseback transaction is as follows:

Sales price 15,000,000

Fair value 16,000,000
Carrying amount 12,000,000
Lease payments in advance 2,000,000
Implicit rate 12%
PV of an ordinary annuity 3.60
PV of an annuity due 4.04

1. What is the cost of the right of use asset?

a. 6,810,000
b. 6,060,000
c. 7,010,000
d. 6,260,000

2. What is the gain on the right of use transferred to be recognized?

a. 1,980,000
b. 1,930,000
c. 1,730,000
d. 2,180,000

3. On January 1, 2021 Rudy Company sold equipment with an estimated remaining useful life of
12 years to Grace Company. At the same time, Rudy leased back the equipment for 5 years.
The lease does not contain a purchase option and the equipment will revert back to Rudy at
the end of the lease term. At the same time the residual value is unguaranteed and considered
insignificant.

Additional information regarding this sale and leaseback transaction is as follows:

Sales price 18,000,000

Fair value 16,000,000
Carrying amount 12,000,000
Lease payments in advance 2,000,000
Implicit rate 12%
PV of an ordinary annuity 3.60
PV of an annuity due 4.04

1. What is the cost of the right of use asset?

a. 6,080,000
b. 5,930,000
c. 4,560,000
d. 7,180,000

9|P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

2. What is the gain on the right of use transferred to be recognized?

a. 1,730,000
b. 1,980,000
c. 2,480,000
d. 2,080,000

PART 4: FINANCE LEASE - LESSOR

 Finance Leases for Lessors is either a sales type lease or direct financing lease.

 Sales-Type Leases (STL) apply to dealer or manufacturers of the asset subject to the lease
contract.

 All other leases are classified as Direct Financing Leases (DFL).

 Both STL and DFL .computes for both gross investment and net investment and is identical
under both types of leases.

 Gross investment is the total lease receivable meaning the lease payments plus reasonably
certain purchase option or residual value whether guaranteed or unguaranteed.

 Net investment is the PV of the gross investment. Under the DFL, the NI is the cost of
the asset plus the initial direct cost capitalized which is equal to the present value of the
gross investment discounted using the implicit rate in the lease

 The difference between the GI and NI is the total financial revenue. The financial revenue
is deferred and amortized over the lease term or financing period.

 Under a sales type lease, sales and cost of sales shall be recognized and the difference is
the selling profit that shall be recognized in full the period of sale.

a) Sales amount to be recognized is the Fair Value or PV of the minimum lease payment
(lease payments + reasonable certain purchase option or residual value guarantee)
whichever is lower.

b) Cost of sales is the cost of the asset plus initial direct cost minus the PV of the
unguaranteed residual value.

c) The interest income is also recognized by using the effective interest method over the
lease term.

 If it is a direct financing lease, the difference of the gross investment and the cost of the
asset including the capitalized initial direct cost is amortized as interest income over the
lease term also under the effective interest method.

 The carrying amount of the lease receivable is equal to the PV of the remaining lease
payments plus the present value of the unguaranteed residual value or net investment at
balance sheet date.

10 | P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

PROBLEMS

1. Lenny Company leases equipment to customers under a direct financing lease arrangement
for a noncancelable period of at least 5 years. On January 1, 2021, Lenny purchased an
equipment for P6,100,000 and immediately leased it to another company for 5 years. Lease
payments of P1,500,000 are to be collected at the beginning of each year on January 1
starting on January 1, 2021. Lenny expects to earn 10% interest on leases. Lenny incurs
P155,000 of initial direct cost in connection with the lease. The lease transfers the ownership
of the asset to the lessee.

1. What is the total financial revenue to be earned by Lenny in this lease?

a. 1,555,000
b. 1,400,000
c. 1,245,000
d. 1,600,000

2. What is the financial revenue in 2021?

a. 750,000
b. 610,000
c. 475,500
d. 625,500

3. What is the carrying amount of the lease receivable to be presented in Lenny’ statement
of financial position on January 1, 2022?
a. 5,230,000
b. 6,000,000
c. 3,730,500
d. 4,755,000

2. Arlene Company is a manufacturer of machinery that sells for cash, on account and leases
machinery. On January 1, 2021, machinery was leased to another enterprise with the
following information:

Annual rental payable at the end of each year 2,000,000

Lease term 5 years
Useful life of machinery 6 years
Cost of machinery 5,000,000
Residual value - guaranteed 1,000,000
Implicit interest rate 10%
PV of an ordinary annuity of 1 for 5 periods at 10% 3.79
PV of 1 for 5 periods at 10% 0.62

11 | P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

At the end of the lease term on December 31, 2025, the machinery will be returned to Arlene.
The perpetual inventory system is used. Arlene incurred initial direct costs of P200,000 in
finalizing the lease agreement.

1. What is the total financial revenue from the lease from the lease transaction?
a. 2,800,000
b. 1,800,000
c. 3,000,000
d. 3,200,000

2. What amount of profit on the sale should Arlene Company report?

a. 3,200,000
b. 3,000,000
c. 2,000,000
d. 2,500,000

3. What amount of interest income should Arlene Company report in 2021?

a. 758,000
b. 820,000
c. 555,000
d. 920,000

4. If the residual value is unguaranteed, what is the total income to be reported by Arlene
from this lease in 2021?
a. 3,000,000
b. 2,800,000
c. 3,820,000
d. 820,000

3. Masso Company is in the business of leasing new sophisticated equipment. As a lessor,

Masso expects a 12% return on its net investment with payments made in advance. All
leases are classified as direct financing leases. At the end of the lease term, the equipment’s
ownership is not transferred to the lessee. On January 1, 2021, equipment is leased to a
lessee with the following information:

Cost of equipment to Masso 6,800,000

Initial direct cost 99,000
Residual value – unguaranteed 550,000
Useful life and lease term 8 years
Implicit interest rate 12%
Present value of an annuity due at 12% for 8 periods 5.564
Present value of 1 at 12% for 8 periods .404

1. What is the annual rent payable in advance?

a. 900,000
b. 850,000
c. 1,000,000
d. 1,200,000

2. What is the total financial revenue from the direct financing lease transaction?
a. 2,800,000

12 | P a g e TSIY/RSORIANO/JPAPA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

b. 3,350,000
c. 3,251,000
d. 2,701,000

end

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