3. Neal Corp. entered into a nine-year lease on a warehouse on December 31, 2019. Lease payments of P52,000, which includes payments for non-lease component of P2,000 (at stand-alone selling price), are due annually, beginning on December 31, 2019, and every December 31 thereafter. Neal does not know the interest rate implicit in the lease; Neal’s incremental borrowing rate is 9%. What amount should Neal report as lease liability at December 31, 2019?
3. Neal Corp. entered into a nine-year lease on a warehouse on December 31, 2019. Lease payments of P52,000, which includes payments for non-lease component of P2,000 (at stand-alone selling price), are due annually, beginning on December 31, 2019, and every December 31 thereafter. Neal does not know the interest rate implicit in the lease; Neal’s incremental borrowing rate is 9%. What amount should Neal report as lease liability at December 31, 2019?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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53. Neal Corp. entered into a nine-year lease on a warehouse on December 31, 2019. Lease payments of P52,000, which includes payments for non-lease component of P2,000 (at stand-alone selling price), are due annually, beginning on December 31, 2019, and every December 31 thereafter. Neal does not know the interest rate implicit in the lease; Neal’s incremental borrowing rate is 9%.
What amount should Neal report as lease liability at December 31, 2019?
a. 280,000 b. 291,200 c. 450,000 d. 468,000
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