A Corp. sold a machinery to a buyer for P1,900,000 on January 1, 2021. Because of the entity’s commitments to its customers to provide their needs for the next three years, A Corp. simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows: Fair value of machinery - P2,200,000 Carrying amount of machinery - P1,700,000 Remaining useful life of machinery - 8 years Lease term - 3 years Annual rent payable at the end of each year, starting on December 31, 2021 - P500,000 Market rate of interest - 10% (Round off the PV factor to four decimal places, then do not round off during the computation) How much is the Right of Use Asset at January 1, 2021? How much is the Gain on Sale-Leaseback?
A Corp. sold a machinery to a buyer for P1,900,000 on January 1, 2021. Because of the entity’s commitments to its customers to provide their needs for the next three years, A Corp. simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows: Fair value of machinery - P2,200,000 Carrying amount of machinery - P1,700,000 Remaining useful life of machinery - 8 years Lease term - 3 years Annual rent payable at the end of each year, starting on December 31, 2021 - P500,000 Market rate of interest - 10% (Round off the PV factor to four decimal places, then do not round off during the computation) How much is the Right of Use Asset at January 1, 2021? How much is the Gain on Sale-Leaseback?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A Corp. sold a machinery to a buyer for P1,900,000 on January 1, 2021. Because of the entity’s commitments to its customers to provide their needs for the next three years, A Corp. simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows:
- Fair value of machinery - P2,200,000
- Carrying amount of machinery - P1,700,000
- Remaining useful life of machinery - 8 years
- Lease term - 3 years
- Annual rent payable at the end of each year, starting on December 31, 2021 - P500,000
- Market rate of interest - 10%
(Round off the PV factor to four decimal places, then do not round off during the computation)
How much is the Right of Use Asset at January 1, 2021?
How much is the Gain on Sale-Leaseback?
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