At the beginning of current year, Day Company leased a new machine from Parr with the following pertinent information: Lease term Annual rental payable at beginning of each year Useful life of machine Implicit interest rate in lease Present value of an annuity of 1 in advance for 5 periods at 12% 4.04 Present value of an ordinary annuity of 1 for 5 periods at 12% 5 years 500,000 8 years 12% 3.60 The lease is not renewable and the machine reverts to Parr at the termination of the lease. The cost of the machine on Parr's accounting records is P3, 755,000.

At the beginning of current year, Day Company leased a new machine from Parr with the following pertinent information: Lease term Annual rental payable at beginning of each year Useful life of machine Implicit interest rate in lease Present value of an annuity of 1 in advance for 5 periods at 12% 4.04 Present value of an ordinary annuity of 1 for 5 periods at 12% 5 years 500,000 8 years 12% 3.60 The lease is not renewable and the machine reverts to Parr at the termination of the lease. The cost of the machine on Parr's accounting records is P3, 755,000.

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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Similar questions

What information should a lessee disclose about its capital leases in its financial statements and footnotes?
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What is the composition of lease Payments?
10
The difference of gross investment in the lease and net investment in the lease of the lessor is? A. Total amount of interest that the lessee shall recognized as interest expense over the lease term. B. Interest income at inception of the lease. C. Total amount of interest that the lessor shall recognized as interest income over the lease term. D. Initial direct cost.
IFRS(a) What is included in the measurement of (1) the lease liability and (2) the right-ofuse asset?(b) Besides the non-cancelable term of the lease, what are other considerations indetermining the “lease term”?(c) When should a lessee account for a lease modification? What procedures arefollowed?
For a lessor, the leased asset appears on the balance sheet and continues to be depreciatedwhen the lease is classifi ed as:A . a sales-type lease.B . an operating lease.C . a fi nancing lease.
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determine the initial recognition, initial measurement, and subsequent measurement offi nance leases;