At the beginning of the current year, an entity leased a building from a lessor with the following pertinent information What is the cost of the right of use asset?
Q: A real estate company has incurred expenses for the acquisition of a permit allowing the…
A: Following is the answer to the given question
Q: An entity accounted for noncurrent assets using the cost model. On July 1, 2019, the entity…
A: When there is a difference between carrying value of asset and fair value less cost of disposal,…
Q: 1. An entity acquired a building for the purpose of leasing it on Jan 1, 2021 for P50 M. At that…
A: Solution: Depreciation on building for 2021 = P50M/40 = P1.25 M
Q: An entity accounted for land using the revaluation model. On October 1, 2020, the entity classified…
A: Given that: Carrying amount of Land = P5,000,000 Revaluation Surplus = P1,500,000 Fair value of land…
Q: He Company owns land and building classified as investment property . The land and building is…
A: Fair value gain for the year 2021 = Fair value of Investment property as on Dec 31, 2021 - Fair…
Q: Name the items, in addition to the amount paid to the former owner or contractor, that may properly…
A:
Q: Robust Company purchased an investment property on January 1, 2019, at a cost of P4,000,000. The…
A: A recognized gain occurs when an investment or asset is sold for a price that is larger than what…
Q: Which of the following transactions would most likely be a deductible repair under s 25-10? a.…
A: Deductible Repair : The amount spent on repairs which are eligible for the deduction from the…
Q: Entity A acquires a building for P1,000,000. The building is to be leased out under various…
A: Depreciation represents the reduction in the value of an asset over a useful life of the asset.
Q: An entity classified a noncurrent asset accounted for under the cost model as held for sale at the…
A: Answer = Option C The lower of carrying amount on the basis that it had never been classified as…
Q: When a company purchases land with a building on it and immediately tears down thebuilding so that…
A: There are various types of assets purchased by a firm in order to use them in the business…
Q: When an entity purchases land with a building on it and immediately tears down the building so that…
A: Assets are resources controlled by the entity. If an expenditure is made on this asset that…
Q: Explain how an entity would initially and subsequently measure its right-of-use asset and lease…
A: Lease Liability: Initial measurement: The Lease Liability is initially measured at the present…
Q: Which of the following statements are TRUE? a. MACRS-GDS uses a half-year convention, whereas…
A: MACRS stands for Modified Accelerated Cost Recovery System. It is a system by which the cost of the…
Q: On December 31, 2021, an entity has a building with cost of Rp500 million and accumulated…
A: Depreciation means the amount of expenses written off from the value of fixed assets used in…
Q: (1) An intangible asset is acquired in connection with a business acquisition O A. Intangible assets…
A: Intangible Assets The examples for the intangible assets are goodwill, copyright, patent, francize,…
Q: Under a property policy, insurable interest must exist at which of the following times? when the…
A: Insurable interest is a type of insurance which protect the policy holder from the financial loss…
Q: Robust Company purchased an investment property on January 1, 2019, at a cost of P4,000,000. The…
A: Formula: Depreciation per year = Asset value / Useful life years
Q: He Company owns land and building classified as investment property. The land and building is being…
A: Fair value gain / loss: It implies to the excess of closing fair value of fixed asset over it's…
Q: An entity accounted for land using the revaluation model. On October 1,2020, the entity classified a…
A: Impairment loss is the permanent diminution in the value of asset. it shows the decrease in the fair…
Q: a) Public infrastructures
A: Building construction, which is included in the fixed asset value of the building, professional fees…
Q: Indicate where the following items would be shown on abalance sheet.(a) A lien that was attached to…
A:
Q: On December 31, 2021, an entity has a building with cost of Rp500 million and accumulated…
A: As per IAS 16- PPE, A decrease arising as a result of a revaluation should be recognized as an…
Q: An entity purchased an investment property on January 1,2020 at a cost of P4,000,000. The property…
A: As per IAS 40 "Investment property", for recording investment property in books of account, one of…
Q: All of the following costs associated with acquiring a building should be capitalized except
A: International financial reporting states that if the cost spent for the development of the business…
Q: During the current year, Black Corporation incurred the following expenditures which should be…
A: Operating expenses are the expenses (or expenditures) that a company incurs in order to operate the…
Q: The cost of intangible asset acquired in business combination is recognized by entity in its book…
A: Intangible assets are those assets which have no physical existence in nature but recognition in…
Q: On January 1, 2019, ABC Company purchased land at a cost of P 6M. the entity used the revaluation…
A:
Q: ABC Ltd., a private company, can report in accordance with either ASPE or IFRS. On January 1, Year…
A: Asset Valuation Provision: As per the Accounting Standards of Private Enterprises- Canada, does not…
Q: On January 1, 2020, Single Company which uses the fair value model, purchases an investment property…
A: The fair value model states that the value of a property is to measured at the conclusion of each…
Q: Refer to the definition of assets on page 204. Discuss howa leased building might qualify as an…
A:
Q: At December 31, 2019, certain accounts included in the property, plant, and equipment section of…
A: (a) 1. Particulars Amount Amount Balance at January 1, 2019 $309,520 Land site…
Q: Which of the following does the IRS consider a capital asset? LA design patent. Fully depreciated…
A: solution : correct answer is : Virtual currency As per the notification issued by IRS in 2014…
Q: Bona Company purchased an investment property on January 1, 2021 for P2,200,000. The property had a…
A: Depreciation is the reduction of the asset due to normal wear and tear, passage of time, etc.
Q: What amount should be recognized as depreciation expense of the right of use asset for the current…
A: BTS Company entered into a 10 year lease for an equipment. The present value of the lease payments…
Q: You Company owns land and building classified as investment property. The land and building is being…
A: When company owns land and building classified as investment property and company uses the fair…
Q: On December 31, 2021, an entity has a building with cost of Rp500 million and accumulated…
A: Disclaimer: Since you have asked multiple questions we only answer the first question for you to…
Q: A company bought a building with the intention of selling it in two years' time and not to use it…
A: Property plant and Equipment section of balance sheet consists of those fixed assets which are…
Q: he applicable IFRS/IAS for a property being constructed or developed for future use as investment…
A: IFRS represents the standards and rules established by IFRs foundation and IASB providing assistance…
Q: 1. What amount should be capitalized initially as cost of the right of use asset? 2. What amount…
A: Red Velvet Company- Leasee lease payment 1000000 lease period 10 years Economic…
Q: Recall the definition of assets: probable economic benefits obtained or controlled by a particular…
A: Lease: It is a legal contract between two or more parties for renting a property, land, or any other…
Q: Adjusted Basis of property is the property's: a. riginal basis adjusted to the date of the…
A: Basis is defined as the property original value or the cost, adjusted for the factors like…
Q: The prior period will be affected if during the current year the management of an entity decides to…
A: Prior period is the period before the current accounting year. Non current asset is the long term…
Q: On July 1, 2020, Sheffield Ltd., a publicly listed company, acquired assets from Bramble Ltd. On the…
A: A reduction in the value of assets due to usage, wear or tear, the passage of time, or obsolescence…
Q: When an entity acquires land with a building on it and immediately tears down the building so that…
A: The expenses incurred on an asset from purchase point to the step to bring it to operation are need…
Q: C & M Securities made several expenditures during the current fiscal year, including the following:…
A: 1 . EXPENDITURE INCURRED TO MAINTAIN THE ASSETS IN THE CURRENT WORKING CONDITION AND ARE NOT…
Q: Which of the following buildings shall be classified as investment property? O Building owned and…
A: The question is based on the concept of Accounting Standard on Investment Property.
Q: On July 1, 2020, Sheffield Ltd., a publicly listed company, acquired assets from Bramble Ltd. On the…
A: Journal Entries - It is records of business each and every transaction whether it is economic or non…
Q: Which of the following is an investment property? Property that is currently being redeveloped to…
A: Investment Property -: In the international financial documenting standards, investment property is…
At the beginning of the current year, an entity leased a building from a lessor with the following pertinent information
What is the cost of the right of use asset?
Step by step
Solved in 2 steps
- At the beginning of current year, an entity leased an equipment from a lessor with the following pertinent information: Annual rental payable at the end of each year 1,000,000 Initial direct cost paid 400,000 Lease bonus paid to lessor before commencement of the lease 300,000 Lease incentive received 100.000 Discounted amount of restoring building as required by contract 700,000 Leasehold improvement 200,000 Purchase option that is reasonably certain to be exercised 500,000 Lease term 5 years Useful life of equipment…At the beginning of current year, an entity sold building with remaining useful life of 25 years and immediately leased it back for 5 years. Sale price at fair value 20,000,000 Carrying amount of building 24,000,000 Annual rental payable at the end of each year 1,000,000 Implicit interest rate 12% Present value of an ordinary annuity of 1 at 12% for 5 periods 3.60 What is the cost of right of use asset? What is annual depreciation of the right of use asset? What is the loss on right transferred? What amount of net rental income should be reported by the lessor?At the beginning of current year, Panorama Company leased a building form a lessor with the following pertinent information Annual rental payable at the end of each year 1,000,000 Initial direct cost paid 400,000 Lease incentive received 100,000 Leasehold improvement 200,000 Purchase option that is reasonably certain to be exercised 500,000 Lease term 5 years Useful life of building 8 years Implicit interest rate 10% PV of an ordinary annuity of 1 for 5 periods at 10% 3.79 Present value of 1 for 5 periods at 10% 0.62 1. What is the cost of the right of use asset? a. 4,500,000 b. 4,400,000 c. 4,700,000 d. 4,600,000 2. What is the depreciation for current year? a. 880,000 b. 900,000 c. 550,000 d. 575,000 3. What is the interest expense for current year? a. 410,000 b. 379,000 c. 450,000 d. 429,000
- Brooks Company leases a machine from TCS Company on 1/1/23. Given: $100,000 $85,000 $20,711 $5,000 $8,000 4% Asset FMV Asset Book Value January 1 payments Guaranteed Salvage Value Lessee expected salvage value Implicit and incremental rates Five-year lease; five-year asset Determine the TCS Lease Receivable at 12/31/23. Select one: a. $79,289 O b. $76,117 c. $76,819 d. $82,461 e. $74,289PROBLEM 5: Lease Agreement with UNGUARANTEED Residual Value, RESTORATION COST and ANNUAL EXECUTORY COST Lazy Company leased a building with useful life of 10 years on January 1, 2020 for period of 8 years with fixed annual rental ofP800,000 which is to be paid at the end of each year. The residual value of P100,000 is unguaranteed. Initial direct cost incurred andpaid by the lessee amounted to P150,000. Additional payment to the lessor to obtain the long-term arrangement of the leaseamounts to P100,000. Annual property taxes/insurance/maintenance and other executory costs paid P90,000. The lease agreementfurther provides restoration cost of the leased asset at the end of lease term for P250,000 (present value). The implicit interest ratein the lease is 10%. REQUIRED: Prepare table of amortization and journal entries for the entire lease termmpany purchaseda Problem 10-32 (IFRS) under a finance At the beginning of current year, Southstar Company leased a building with the following information: ity were originally Annual rental payable at the end of each lease year Initial direct cost paid Lease incentive received Lease bonus paid to lessor before commencement of lease Present value of cost of restoring the building as required by contract discounted at 8% Purchase option that is reasonably certain Lease term Useful life of building Implicit inierest rate Present value of an ordinary annuity of 1 at 10% for 6 periods Present value of 1 at 10% for 6 periods 1,500,000 405,000 50,000 300,000 lated depreciation and the remaining 0,000. -P1,500,000 cash. 945,000 1,000,000 6 years 10 years 10% 4.36 0.56 of the machinery 1. What amount should be recorded initially as cost of right of use asset? a. 8,750,000 b. 8,700,000 c. 9,900,000 d. 7,755,000 2. What amount should be recorded as annual depreciation of the right of the asset?…
- At the beginnig of current year, East Company leased a new machine from North Company with the following information: Annual rental payable at beginning of each lease year 4000,000Lease Term 10 yearsUseful life of machine 12 yearsImplicit interest rate 14% Present value of an annuity of 1 in advance for 10 periods at 14% 5.95Present value of 1 for 10 periods at 14% 0.27 East company had the option to purchase the machine upon the expirtation of the lease term by paying P500,000. The purchase option is reasoably certain to be exercised. What amount should East Company…On January 1, 2021, Wait Company leased equipment from a lessor with the following information:Annual rental payable every December 31: 2,000,000Residual value guarantee: 1,000,000Initial direct cost: 600,000Estimated dismantling and restoration cost required by contract at present value: 780,000Annual executory cost paid by the entity: 100,000The lease term is four years while the equipment’s useful life is 8 years. The implicit rate in the lease, known by the entity, is 10%. The present value of an ordinary annuity of 1 at 10% for 4 periods is: 3.17. The present value of 1 at 10% for 4 periods is: 0.68. What is the initial lease liability? 6,340,0007,020,0008,000,0008,400,000 What is the cost of the right of use asset? 6,340,0007,020,000 8,400,0008,000,000On January 1, 2020, ABC Company leased a machinery with the following information: Annual rental payable at the end of each year 1,000,000 Residual Value Guarantee 500,000 Payment to lessor to obtain a long-term lease 300,000 Cost of dismantling and restoring the asset as required by contract at present value 390,000 Annual executory cost paid by lessee 50,000 Lease Term 4 years Useful life of the machinery 8 years Implicit Interest Rate 10% 1. What is the initial lease liability? 2. What is the cost of right of use asset?
- P330,000 including executory cost of P30,000, and the machine · for the lease of a machine from another entity. The machine Troy Company prepared the following amortization schedule shall be returned to the lessor at the end of the lease term. The lease agreement required four annual payments of Problem 10-10 (IFRS) had an economic life of six years. Reduction Balance of liability Interest Minimum lease payment expense liability 1 /1/2021 12/31/ 2021 12/31/2022 12/31/ 2023 12/31/ 2024 300,000 300,000 300,000 300,000 98,515 78,366 56,203 31,766 201,485 221,634 243,797 268,234 985,150 783,665 562,031 318,234 50,000 Required: 1. Prepare journal entry to record the finance lease on January 1, 2021. 2. Prepare journal entry on December 31, 2021 to record the annual lease payment and the executory cost. 3. Prepare journal entry to record the depreciation for 2021. 4. Prepare journal entry to record the annual lease.payment and the executory cost on December 31, 2024. 5. Prepare journal entry…On January 1, 2021, Wait Company leased equipment from a lessor with the following information: Annual rental payable every December 31: 2,000,000Residual value guarantee: 1,000,000Initial direct cost: 600,000Estimated dismantling and restoration cost required by contract at present value: 780,000Annual executory cost paid by the entity: 100,000 The lease term is four years while the equipment’s useful life is 8 years. The implicit rate in the lease, known by the entity, is 10%.§ The present value of an ordinary annuity of 1 at 10% for 4 periods is: 3.17§ The present value of 1 at 10% for 4 periods is: 0.68 1. What is the initial lease liability? Group of answer choices 6,340,000 7,020,000 8,000,000 8,400,000 2. What is the cost of the right of use asset? Group of answer choices 6,340,000 7,020,000 8,400,000 8,000,000Problem 10-30 (IFRS)At the beginning of current year, Southstar Company leased a building withthe following information:Annual fixed payment in advance at the beginning of each lease year1, 000, 000Initial direct cost paid350, 000Least incentive received150, 000Lease bonus paid to lessor before commencement of lease100, 000Discounted amount of restoring the building as required by contract200, 000Purchase option that is not reasonably certain to be exercised300, 000Lease term 5 yearsUseful life of building 8 yearsImplicit interest rate 8%Present value of an annuity of 1 in advance at 8% for 5 periods 4.31Present value of 1 at 8% for 5 periods .68 1. What is the initial lease liability?a. 4, 514, 000b. 4, 310, 000c. 4, 614, 000d. 4, 764, 0002. What is the cost of right of use asset?a. 4, 814, 000b. 4, 810, 000c. 4, 710, 000d. 4, 610, 000