Annual rental payable at the end of each year January 1, 2020 with the following information: Cavalier Company entered into a lease of building on Annual rental payable at the end of each year Lease term Useful life of building Implicit interest rate PV on an ordinary annuity of 1 at 9% for 5 periods 600,000 5 years 20 years 9% 3.890 The lease contained an option for the lessee to extend the lease for a further 5 years. At the commencement date, the exercise of the extension option is not reasonably certain. After 3 years on January 1, 2023, the lessee decided to extend the lease for a further 5 years. 800,000 12% New annual rental payable at the end of each year New implicit interest rate PV of an ordinary annuity of 1 at 12% for 5 periods PV of 1 at 12% for 2 periods PV of an ordinary of 1 at 12% for 2 periods 3.605 0.797 1.690

Annual rental payable at the end of each year January 1, 2020 with the following information: Cavalier Company entered into a lease of building on Annual rental payable at the end of each year Lease term Useful life of building Implicit interest rate PV on an ordinary annuity of 1 at 9% for 5 periods 600,000 5 years 20 years 9% 3.890 The lease contained an option for the lessee to extend the lease for a further 5 years. At the commencement date, the exercise of the extension option is not reasonably certain. After 3 years on January 1, 2023, the lessee decided to extend the lease for a further 5 years. 800,000 12% New annual rental payable at the end of each year New implicit interest rate PV of an ordinary annuity of 1 at 12% for 5 periods PV of 1 at 12% for 2 periods PV of an ordinary of 1 at 12% for 2 periods 3.605 0.797 1.690

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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