White Company leased a building on Jan. 1 with the following information P 1,000,000 Fixed annual payment at the end of each year Initial direct costs paid 350,000 150,000 Lease bonus paid before commencement of lease Lease incentives received 100,000 Discounted amount of restoring the building as required by the contract 200,000 Lease term 5 years Useful life of building 8 years Implicit interest rate 8% Incremental borrowing rate 10% PV of an ordinary annuity of 1 for 5 periods at 8% 3.99 10% 3.79 PV of an annuity due of 1 for 5 periods at 8% 4.31 10% 4.17 PV of 1 for 5 periods at 8% 0.68 10% 0.62 The expected fair value at the end of the building's useful life is P 400,000. The straight-line depreciation is used

White Company leased a building on Jan. 1 with the following information P 1,000,000 Fixed annual payment at the end of each year Initial direct costs paid 350,000 150,000 Lease bonus paid before commencement of lease Lease incentives received 100,000 Discounted amount of restoring the building as required by the contract 200,000 Lease term 5 years Useful life of building 8 years Implicit interest rate 8% Incremental borrowing rate 10% PV of an ordinary annuity of 1 for 5 periods at 8% 3.99 10% 3.79 PV of an annuity due of 1 for 5 periods at 8% 4.31 10% 4.17 PV of 1 for 5 periods at 8% 0.68 10% 0.62 The expected fair value at the end of the building's useful life is P 400,000. The straight-line depreciation is used

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 64E

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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, 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. $74,289
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 8,400,0008,000,000
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 8,000,000
At the beginning of current year , EDSA company leased a building with the following information: 1) Annual fixed payment in advance at the beginning of each lease year -1,000,000 2) initial direct cost paid 350,000 3) Lease incentive received -150,000 4) Lease bonus paid to lessor before commencement of lease- 100,000 5) Present value of cost of restoring the building as required by contract discounted at 6% -200,000 6) Purchase option that is not reasonably certain to be exercised - 300,000.00 7) Lease term 5 years 8) Implicit interest rate 8% 9) PV of an annuity of 1 in advance at 8% for 5 periods 4.31 10) PV of 1 at 8% for 5 periods .68. What is the initial lease liability? 4,310,000.00 4,614,000.00 4,764,000.00 4,514,000.00 Answer fast with solution
At the beginning of current year, Waxxy Company sold a machine and immediately leased back. The following data relate to the sale and leaseback transaction: Sale price at above fair value 6,000,000 Fair value of machine 5,000,000 Carrying amount of machine 4,500,000 Annual rental payable at the end of each year 800,000 Remaining life of machine 10 years Lease term 4 years Implicit interest rate 8% Present value of an ordinary annuity of 1 at 8% for four periods 3.312 There is no transfer of title to the lessee nor…
On 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?
mpany 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?…
A Co. recorded a right-of-use asset of $400,000 in a 10-year operating lease. Payments of $65,100 are made annually at the end of each year. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after the first year will be: a. $376,900. b. $374,900. c. $360,000. d. $400,000.
At the beginning of current year, World Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction:Sale price at fair value: 5,000,000Carrying amount of machine: 6,000,000Annual rental payable at the end of each year: 500,000Lease term: 5 yearsRemaining life of machine: 20 yearsImplicit interest rate: 6%Present value of an ordinary annuity of 1 at 6% for 5 periods: 4.21 What is cost of right of use asset? 2,895,0002,105,0002,526,0001,500,000