Leases 331 December 30, 20x5, Entity A leased a new. machine from Cregg Corp. The following data relate to the lease transaction at the inception of the lease: Lease term 10 years Annual rental payable at the end of each lease year P100,000 12 years Useful life of machine 10% Implicit interest rate Fair value of the machine P700,000 The lease has no renewal option, and the possession of the machine reverts to Gregg when the lease terminates. At the inception of the lease, Entity A should record a lease liability of c. 630,000 d. 676,000 a. 0 b. 615,000 (AICPA) 5. On January 2, 20x6, Entity A entered into a ten-year non- cancellable lease requiring year-end payments of P100,000. Entity A's incremental borrowing rate is 12% while the lessor's implicit interest rate, known to Entity A, is 10%. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Entity A capitalize for this leased property on January 2, 20x6? a. 1,000,000 b. 614,500 (AICPA) c. 565,000 d. 0 6. Entity A'entered into a nine-year finance lease on . December 31
Leases 331 December 30, 20x5, Entity A leased a new. machine from Cregg Corp. The following data relate to the lease transaction at the inception of the lease: Lease term 10 years Annual rental payable at the end of each lease year P100,000 12 years Useful life of machine 10% Implicit interest rate Fair value of the machine P700,000 The lease has no renewal option, and the possession of the machine reverts to Gregg when the lease terminates. At the inception of the lease, Entity A should record a lease liability of c. 630,000 d. 676,000 a. 0 b. 615,000 (AICPA) 5. On January 2, 20x6, Entity A entered into a ten-year non- cancellable lease requiring year-end payments of P100,000. Entity A's incremental borrowing rate is 12% while the lessor's implicit interest rate, known to Entity A, is 10%. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Entity A capitalize for this leased property on January 2, 20x6? a. 1,000,000 b. 614,500 (AICPA) c. 565,000 d. 0 6. Entity A'entered into a nine-year finance lease on . December 31
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
show me the solution for no. 5.. thanksss
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education