332 Chapter 13 b. 291,200 d. 468,000 (AICPA) 7. On January 2, 20x9, Entity A (lessee) entered into a 5-vo lease for drilling equipment. Entity A accounted for acquisition as a finance lease for P240,000, which include P10,000 bargain purchase option. At the end of the lease Entity A expects to exercise the bargain purchase option. Entity A estimates that the equipment's fair value will he P20,000 at the end of its 8-year life. Entity A regularly uses straight-line depreciation on similar equipment. For the year ended December 31, 20x9, what amount should Entity A recognize as depreciation expense on the leased asset? a. 48,000 b. 46,000 с. 30,000 d. 27,500 (AICPA) 8. Entity A leases computer equipment to customers under direct-financing leases. The equipment has no residual value at the end of the lease and the leases do not contain bargali purchase options. Entity A wishes to earn 8% interest on a five-year lease of equipment with a fair value of P323,400. Te first rental payment is due at the lease commencement. am is the total amount of interest revenue that Entity A W over the life of the lease? a. 51,600 b. 75,000 (AICPA) c. 129,360 d. 139,450

332 Chapter 13 b. 291,200 d. 468,000 (AICPA) 7. On January 2, 20x9, Entity A (lessee) entered into a 5-vo lease for drilling equipment. Entity A accounted for acquisition as a finance lease for P240,000, which include P10,000 bargain purchase option. At the end of the lease Entity A expects to exercise the bargain purchase option. Entity A estimates that the equipment's fair value will he P20,000 at the end of its 8-year life. Entity A regularly uses straight-line depreciation on similar equipment. For the year ended December 31, 20x9, what amount should Entity A recognize as depreciation expense on the leased asset? a. 48,000 b. 46,000 с. 30,000 d. 27,500 (AICPA) 8. Entity A leases computer equipment to customers under direct-financing leases. The equipment has no residual value at the end of the lease and the leases do not contain bargali purchase options. Entity A wishes to earn 8% interest on a five-year lease of equipment with a fair value of P323,400. Te first rental payment is due at the lease commencement. am is the total amount of interest revenue that Entity A W over the life of the lease? a. 51,600 b. 75,000 (AICPA) c. 129,360 d. 139,450

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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