Show your Solution Activity:1. Entity A (customer) enters into a contract with Entity B (supplier) for the use of a dataprocessing equipment. According to the contract, Entity A shall operate the equipment only inaccordance with the standard operating procedures stated in the accompanying user's manual.In assessing the existence of a lease, does Entity A have the right to direct the us.of the asset?a No, because the asset's use is restricted.b. Yes, because Entity A has the right to direct how and for what purpose the asset is used.c. Yes, because the asset's use is predetermined and Entity B is preciuded from changing thatpredetermined use.d. Maybe yes, maybe no, but exactly I don't know.2. Which of the following is not one of the criteria when determining whether a contract is orcontains a lease?a Identified assetb. Identified liabilityc. Right to obtain substantially all of the economic benefits from use of an identified assetthroughout the period of used. Right to direct the use of the identified asset throughout the period of use3. Which of the following statements is correct regarding the accounting for leases?a The lessor depreciates the leased asset under a finance lease.b. The lessee depreciates the leased asset under a "short-term" or a "low-valued asset" lease.c. When discounting lease payments the lessor and the lessee use the interest rate implicit inthe lease.d. An entity can never be both a lessor and a lessee of a same leased asset.4. According to PFRS 16, lease liabilities are presented in the lessee's statement of financial positiona separately from the other liabilities of the lessee.b. together with other liabilities, with disclosure of the line items that include the leaseliabilities.с. а отьd. not presented in the lessee's financial statements but only in the lessor's financial statements5. According to PFRS 16, right-of-use assets are presented in the lessee's statement of financialpositiona separately from the other assets of the lessee.b. together with other assets as if they were owned, with disclosure of the line items thatinclude the right-of-use assets.C. a or bd. not presented in the lessee's financial statements but only in the lessor's financial statements 6. On January 2, 20x9, Nori Mining Co. (lessee) entered into a 5-year lease for drilling equipment.Nori recognized a lease liability of P240,000 at the commencement date. This amount includesthe P10,000 exercise price of a purchase option. At the end of the lease, Nori expects to exercisethe purchase option Nori estimates that the equipment's fair value will be P20,000 at the end ofits 8-year life. Nori regularly uses straight-line depreciation on similar equipment. For the yearended December 31, 20x9, what amount should Nori recognize as depreciation expense on theleased asset?a. 45,000b. 46,000c. 30,000d. 27,5007. In the long-term liabilities section of its balance sheet at December 31, 20x9, Mene Co. reported alease liability of P75,000, net of current portion of P1,364. Payments of P9,000 were made on bothJanuary 2, 2x10, and January 2, 2x11. Mene's incremental borrowing rate on the date of the leasewas 11% and the lessor's implicit rate, which was known to Mene, was 10%. In its December 31,2x10, balance sheet, what amount should Mene report as lease liability, net of current portion?a. 66,000b. 73,500c.73,636d. 74,2508. Oak Co. leased equipment for its entire nine-year useful life, agreeing to pay P50,000 at the startof the lease term on December 31, 20x8, and P50,000 annually on each December 31 for the nexteight years. The present value on December 31, 20x8, of the nine lease payments over the leaseterm, using the rate implicit in the lease which Oak knows to be 10%, was P316,500. TheDecember 31, 20xS, present value of the lease payments using Oak's incremental borrowing rateof 12% was P298,500. Oak made a timely second lease payment. What amount should Oak reportas lease liability in its December 31, 20x9, balance sheet?a. 350,000b. 243,150c. 228,320d. 09. On January 2, 20x5, Marx Co. as lessee signed a five-year noncancelable equipment lease withannual payments of P200,000 beginning December 31, 20x5. The five lease payments have apresent value of P758,000 at January 2, 20x5, based on interest of 10%. What amount shouldMarx report as interest expense for the year ended December 31, 20x5?a. 0b. 48,000c. 55,800d. 75,80010. On January 1, 20x1, ABC Co. enters into a 4-year lease of office equipment. The rent in 20x1 isP10,000 and shall increase by 10% annually starting on January 1, 20x2. Rentals are payable atthe end of each year. ABC Co. pays the lessor a lease bonus of P5,000 on January 1, 20x1. ABCCo. opts to use the practical expedient allowed under PFRS 16 for leases of low value assets.How much is the lease expense in 20x1?a. 10,000b. 11,000c 11,603d. 12,853

Hi student Since there are multiple questions, we will answer only first question.

Activity: 1. Entity A (customer) enters into a contract with Entity B (supplier) for the use of a data processing equipment. According to the contract, Entity A shall operate the equipment only in accordance with the standard operating procedures stated in the accompanying user's manual. In assessing the existence of a lease, does Entity A have the right to direct the usg of the asset? a No, because the asset's use is restricted. b. Yes, because Entity A has the right to direct how and for what purpose the asset is used. c. Yes, because the asset's use is predetermined and Entity B is precluded from changing that predetermined use. d. Maybe yes, maybe no, but exactly I don't know.

Activity: 1. Entity A (customer) enters into a contract with Entity B (supplier) for the use of a data processing equipment. According to the contract, Entity A shall operate the equipment only in accordance with the standard operating procedures stated in the accompanying user's manual. In assessing the existence of a lease, does Entity A have the right to direct the usg of the asset? a No, because the asset's use is restricted. b. Yes, because Entity A has the right to direct how and for what purpose the asset is used. c. Yes, because the asset's use is predetermined and Entity B is precluded from changing that predetermined use. d. Maybe yes, maybe no, but exactly I don't know.

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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