Darwin Company leased machinery for 10 years, its useful life, with effect from January 1,2020. At that date, the fair value of the machinery was P4,900,000. Annual rentals ofP700,000 are payable in advance on January 1 and the interest rate implicit in the lease is 9%.The first rental payment was made on January 1, 2020.What is the total lease liability (principal and interest) which Darwin Company shouldrecognized in its statement of financial position on December 31, 2020?

The fair value of the machinery was 4900000 as on January 1, 2020. Annual rental payment on January…

Answered: What is the total Tease liability…

What is the total Tease liability (principal and interest) which Darwin Company should recognized in its statement of financial position on December 31, 2020?

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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Question

Darwin Company leased machinery for 10 years, its useful life, with effect from January 1,
2020. At that date, the fair value of the machinery was P4,900,000. Annual rentals of
P700,000 are payable in advance on January 1 and the interest rate implicit in the lease is 9%.
The first rental payment was made on January 1, 2020.
What is the total lease liability (principal and interest) which Darwin Company should
recognized in its statement of financial position on December 31, 2020?

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