3. On January 1, 20x1, Lessee enters into a 5-year lease of equipment. Annual rental is P300,000 payable at the end of Leases each year. The implicit interest rate in the lease is 9%. The contract provides for a purchase option with an exercise price of P500,000. Lessee is reasonably certain to exercise the purchase option at the end of the lease term. The remaining useful life of the underlying asset is 8 years. Lessee uses the straight line method of depreciation. Requirements: a. Prepare the amortization table for the lease liability. b. Provide the journal entries on the following dates: January 1, 20x1 and December 31, 20x1.
3. On January 1, 20x1, Lessee enters into a 5-year lease of equipment. Annual rental is P300,000 payable at the end of Leases each year. The implicit interest rate in the lease is 9%. The contract provides for a purchase option with an exercise price of P500,000. Lessee is reasonably certain to exercise the purchase option at the end of the lease term. The remaining useful life of the underlying asset is 8 years. Lessee uses the straight line method of depreciation. Requirements: a. Prepare the amortization table for the lease liability. b. Provide the journal entries on the following dates: January 1, 20x1 and December 31, 20x1.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...
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