8-year lease of a floor of building with useful life of 15 years Annual rental for the first three years payable Problem 11-7 (IFRS) On January 1, 2021, Northstar Company entered into an with the following terms: at the end of each year Annual rental for the next five years payable at the end ofeach year Implicit interest rate PV of an ordinary annuity of 1 at 10% for three periods PV of an ordinary annuity of 1 at 10% for five periods. PV of at 10% for three periods 300,000 400,000 10% 2.49 3.79 0.75 The lease provided for neither a transfer of title to the lessee nor a purchase option. 1. What amount should be reported as lease liability on January 1, 2021? a. 1,516,000 b. 2,263,000 c. · 1,884,000 d. 1,697,250 2. What amount should be reported as interest expense for 2021? a. 188,400 b. 226,300 c. 151,600 d. 169,725 3. What amount should be reported as interest expense for 2024? a. 151,460 b. 126,606 c. 164,964 d. 200,000 4. What amount should be reported as lease liability on December 31, 2024? a. 1,614,604 b. 1,266,064 c. 1,366,064 d. 1,214,604

8-year lease of a floor of building with useful life of 15 years Annual rental for the first three years payable Problem 11-7 (IFRS) On January 1, 2021, Northstar Company entered into an with the following terms: at the end of each year Annual rental for the next five years payable at the end ofeach year Implicit interest rate PV of an ordinary annuity of 1 at 10% for three periods PV of an ordinary annuity of 1 at 10% for five periods. PV of at 10% for three periods 300,000 400,000 10% 2.49 3.79 0.75 The lease provided for neither a transfer of title to the lessee nor a purchase option. 1. What amount should be reported as lease liability on January 1, 2021? a. 1,516,000 b. 2,263,000 c. · 1,884,000 d. 1,697,250 2. What amount should be reported as interest expense for 2021? a. 188,400 b. 226,300 c. 151,600 d. 169,725 3. What amount should be reported as interest expense for 2024? a. 151,460 b. 126,606 c. 164,964 d. 200,000 4. What amount should be reported as lease liability on December 31, 2024? a. 1,614,604 b. 1,266,064 c. 1,366,064 d. 1,214,604

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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