The following information pertains to a leased contract entered into by LP Company. lessee, on January 1, 2018: Lease term, 5 years, useful life of the leased asset, 20 years; Annual rental payable at year-end, P800,000 and the implicit rate is 10%. The lease contract contains an option for LP Company to extend for another 5 years but at the commencement of the lease, the exercise of the option is not reasonably certain, however on January 1, 2021, LP Company decided to extend the lease term by another 5 years. However, the annual rental starting 2023 (6th year) will be P1,000,000 and the new implicit rate is 8%. How much is the depreciation expense in 2021? A.P643,293 B.P658,823 C.P667,763 D.P670,723

JK Ltd enters into a non-cancellable five-year lease agreement with Burt Ltd on 1 July 2019. The lease is for an item of machinery that, at the inception of the lease, has a fair value of $647,192. The machinery is expected to have an economic life of six years, after which time it will have an expected residual value of $105,000. There is a bargain purchase option that JK Ltd will be able to exercise at the end of the fifth year for $140,000. There are to be five annual payments of $175,000, the first being made on 30 June 2020. Included with $175,000 lease payments is an amount of $17,500 representing payment to the lessor for the insurance maintenance of the equipment. The equipment is to be depreciated on a straight-line basis. a. Determine the rate of interest implicit in the lease and calculate the present value of the lease payments. b. Prepare the journal entries in the books of JK Ltd for the years ending 30 June 2020 and 30 June 2021. c. Prepare the portion of the statement…

The following facts pertain to a non-cancelable lease agreement between Wildhorse Leasing Company and Windsor Company, a lessee. Commencement date June 1, 2025 Annual lease payment beginning with June 1, 2025 $19,998.50 Bargain purchase option price at end of lease term $7,000.00 Lease term Economic life of leased equipment (no salvage value) Lessor's cost Fair value of asset at June 1, 2025 4 years 12 years $56,000 $78,999 Lessor's implicit rate (known to lessee) 6% Lessee's incremental borrowing rate 69 The collectibility of the lease payments by Wildhorse is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) (b) (c) Your answer is partially correct. Prepare a lease amortization schedule for Windsor for the 4-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) WINDSOR COMPANY (Lessee) Date 6/1/25 $ 6/1/25 6/1/26 6/1/27 6/1/28 5/31/29 Annual Lease Payment Plus BPO $ Lease…

Small Ltd signed a 3-year contract with Big Ltd for the use of a factory on 1 July 2020 with the option to purchase the machinery at the end of the lease term. It is reasonably expected that Small Ltd will not exercise the bargain purchase option but returns the asset to the lessor. The leased machinery meets the criteria of a leased asset in accordance with AASB16 Leases. The following information shows the lease terms: Lease term (non-cancellable) Expected useful life of the machinery Expected residual value of the machinery Residual value guaranteed Expected fair value of the machinery at the end of lease term Bargain purchase price at the end of lease term Net initial directly attributable costs (paid at 1 July 2020) Initial lease payment (paid at 1 July 2020) Annual lease payment (paid in arrears at 30 June) Interest rate implicit in the lease O $36,857 O $98,284 O $36,857 3 years O $84,049 8 years nil $40 000 $50 000 $60 000 $10 000 What is the amount the depreciation expense…