Assume that the lessee guarantees a residual value of P30,000 at the end of the lease term. What is the depreciation expense for 2021? For numbers 6 to 10, please refer to the following problem: On January 1, 2021, DIXIE KONG Corp. leased six computers for use of Accountancy Department. The lease period is five years, and the estimated economic life of the leased property is six years. The lease does not contain automatic title transfer and purchase option. Annal lease payments are payable in advance every January 1 in the amount of P90,000. The incremental borrowing rate for DIXIE KONG Corp. is 12% and the implicit rate known to DIXIE KONG is 10%. The company uses straight-line depreciation for this type of asset. Round off PV factors to two decimal places.

Assume that the lessee guarantees a residual value of P30,000 at the end of the lease term. What is the depreciation expense for 2021? For numbers 6 to 10, please refer to the following problem: On January 1, 2021, DIXIE KONG Corp. leased six computers for use of Accountancy Department. The lease period is five years, and the estimated economic life of the leased property is six years. The lease does not contain automatic title transfer and purchase option. Annal lease payments are payable in advance every January 1 in the amount of P90,000. The incremental borrowing rate for DIXIE KONG Corp. is 12% and the implicit rate known to DIXIE KONG is 10%. The company uses straight-line depreciation for this type of asset. Round off PV factors to two decimal places.

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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Question

Under leases

Assume that the lessee guarantees a
residual value of P30,000 at the end of
the lease term. What is the depreciation
expense for 2021?
For numbers 6 to 10, please refer to the following problem:
On January 1, 2021, DIXIE KONG Corp. leased six computers for use of Accountancy Department.
The lease period is five years, and the estimated economic life of the leased property is six years.
The lease does not contain automatic title transfer and purchase option. Annal lease payments are
payable in advance every January 1 in the amount of P90,000. The incremental borrowing rate for
DIXIE KONG Corp. is 12% and the implicit rate known to DIXIE KONG is 10%. The company uses
straight-line depreciation for this type of asset.
Round off PV factors to two decimal places.
а. 75,060
b. 72,780
с. 65,946
d. 65,655

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