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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