cash selling price of the equipment is P3,520,000, and the costrate of interest contemplated by Peg and Howe is 10%. TheThe first payment was made on July 1, 20x5. Thepayments under the lease are P600,000 and are due on July 1for an eight-year period expiring June 30, 2x03. EqualJuly 1, 20x5,6. Peg Co. leased equipment from Howe Corp. onJuly 1payments under the lease are P600,000 and are due onof eachyear.cash selling price of the equipment is P3,520,000, and the cof the equipment on Howe's accounting records is P2,800.0The lease is appropriately recorded as a sales-type lease. Whatis the amount of profit on the sale and interest revenue thatHowe should record for the year ended December 31, 20x5?Profit on salea. 720,000b. 720,000Interest revenue176,000146,000c. 45,000d. 45,000176,000146,000(AICPA)

Lease means giving out the assets by lessor to lessee to use that assets in return of rent.…

July 1, 20x5, payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 20x5. The for an eight-year period expiring June 30, 2x03. Equal 6. Peg Co. leased equipment from Howe Corp. on payments under the lease are P600,000 and are due July 1 of each year. rate of interest conțemplated by Peg and Howe is 10% cash selling price of the equipment is P3,520,000, and the c of the equipment on Howe's accounting records is P2,800.0m0 The lease is appropriately recorded as a sales-type lease. What is the amount of profit on the sale and interest revenue that Howe should record for the year ended December 31, 20x5? Profit on sale a. 720,000 b. 720,000 cost Interest revenue 176,000 146,000 C. 45,000 d. 45,000 176,000 146,000

July 1, 20x5, payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 20x5. The for an eight-year period expiring June 30, 2x03. Equal 6. Peg Co. leased equipment from Howe Corp. on payments under the lease are P600,000 and are due July 1 of each year. rate of interest conțemplated by Peg and Howe is 10% cash selling price of the equipment is P3,520,000, and the c of the equipment on Howe's accounting records is P2,800.0m0 The lease is appropriately recorded as a sales-type lease. What is the amount of profit on the sale and interest revenue that Howe should record for the year ended December 31, 20x5? Profit on sale a. 720,000 b. 720,000 cost Interest revenue 176,000 146,000 C. 45,000 d. 45,000 176,000 146,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Aa.31.
8. On January 1, 2019, an entity leased a machinery for 4 years which is the same as the useful life of the machinery at annual rental or fixed payment of P120,000. The lease provides for a transfer of ownership of the underlying asset to the lessee at the end of the lease term. The implicit interest rate of the lease is 12%. (Do not round off the PVF). The lease payment is to be made at the end of each year. Determine the noncurrent portion of the lease liability at the end of 2019. (Round off final answer to whole number)
On January 1, 2020, Chan Company entered in a five-year lease agreement with rentals of P100,000 payable at yearend for the first three years and P150,000 payable at the succeeding yearends. At an implicit interest rate of 10%, the lease liability and right of use asset was initially recorded at P475,322. The asset will revert to the lessor at a guaranteed residual value at the end of the lease term. The fair value of the asset on December 31, 2024 is P35,000. 1. How much is the carrying amount of the lease liability on December 31, 2022? 2. How much is the carrying amount of the right of use asset as of yearend 2021? 3. How much is the total amount to be reflected on the 2024 profit or
Figy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000 was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000 each. The rate implicit in the lease is 10%. Figy Co incurred initial direct costs of X2 to set up the lease. Required: 1. Give your own X2 then calculate the cost of the right-of-use asset as at 1 January 20X5? 2. What is the carrying amount of the lease liability at 31 December 20X6? 3. What amount will be charged to the statement of profit or loss in respect of this asset for the year ended at 31 December 20X6? 4. Prepare necessary accounting entries related to this lease agreement for the year ended at 31 December 20X5.
5. On June 30, year 1, Menchen, Inc. leased equipment from Davis Leasing. The lease agreement calls for Menchen to make semiannual lease payments of $ 400, 500 over a seven- year lease term, on June 30 and December 31. This is also the assets useful life. The first payment was due immediately on June 30, year 1. The interest rate used is the incremental borrowing rate of 11%. The cost of the asset to Davis was $ 4,051,891 using a factor of 10.11708. a. using an amortization table what amount would Davis show on its balance sheet on December 31, year 1? b. what amount would Davis show on its income statement on December 31,year 1?
The following information relates to an equipment lease with an inception date of January 1: Fair value of equipment at lease inception, $56,000 Lease term, 5 years Economic life of property, 6 years Implicit interest rate, 7% Annual lease payment due on December 31, $13,200 The equipment reverts back to the lessor at the end of the lease term. How much is recorded as the lease liability on the lease inception date? Select one: a. $66,000 b. $56,000 c. $57,911 d. $54,123
On January 1, 20X0, an entity leased an equipment for four years at an annual rental of $170,000 payable at the end of each year. The estimated useful life of the equipment is four years. The present value factor of an ordinary annuity of 1 for four years of an implicit rate of 12% is 3.0373. The lease provides for a transfer of ownership of the equipment to the lessee at the end of the lease term. Compute for the depreciation expense for the right of use of asset for the year ended December 31, 20x0.
On July 1, 2020 an entity entered into an 8-year lease of a floor of a building with the following terms: Annual rental for the first three years payable at the end of each year 300,000 Annual rental for the next five years payable at the end of 400,000 each year Implicit interest rate 10% Compute the balance of lease liability on December 31, 2020. (Use four decimal places for your present value ex:1.3284) O 1,773,408 O 1,884,916 O 1,138,816 O 1,829,152
Sur Food Corp., leased machine from Al-Urami Corp. the lease agreement for the O.R 750,000 (fair and present value of the lease payment) machine specified five equal payments at the end of each year. The implicit interest rate was 9% Required: 1. Prepare the journal entry for Al-Urami Corp. at the inception of the lease on January 1, 2019. 2. Prepare an amortization schedule for the three-year term of the lease Note: Present value of an ordinary annuity of $1.n=5,1%39% is 3.88965
am. 90.
Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms: Annual lease payment: $990,000 Term of lease: 5 years Interest rate: 4% Lease commences on January 1, 2023 Payments are made on December 31 of each year in the lease term For parts a and b: a. Prepare journal entries to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as a finance lease. b. Prepare journal entries to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as an operating lease. Operating Lease Finance Lease a. Finance lease: Date Jan. 1, 2023 Account To record the start of the finance lease. Dec. 31, 2023 To record the amortization of leased asset. Dec. 31, 2023 Dec. 31, 2024 Dec. 31, 2024 To record the lease payment. To record the amortization of leased asset. To record the lease payment. > > > > > > > > > > Debit Credit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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