Entity A's incremental borrowing rate is 9%. What amount should Entity A report as finance lease liability at December 31, 20x1? -
Entity A's incremental borrowing rate is 9%. What amount should Entity A report as finance lease liability at December 31, 20x1? -
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:b. 614,500
(AICPA)
Fetity A entered into a nine-year finance lease on a warehouse
on December 31, 20x1. Lease payments of P52,000, which
include real estate taxes of P2,000, are due annually, beginning
on December 31, 20x1, and every December 31 thereafter.
Entity A does not know the interest rate implicit in the lease;
Entity A's incremental borrowing rate is 9%. What amount
should Entity A report as finance lease liability at December
31, 20x1?
c. 450,000
6. Entity A entered into a nine-year finance lease on a warehouse
on December 31, 20x1. Lease payments of P52,000, which
Transcribed Image Text:332
Chapter 13
b. 291,200
d. 468,000
(AICPA)
7. On January 2, 20x9, Entity A (lessee) entered into a 5-vo
lease for drilling equipment. Entity A accounted for
acquisition as a finance lease for P240,000, which include
P10,000 bargain purchase option. At the end of the lease
Entity A expects to exercise the bargain purchase option.
Entity A estimates that the equipment's fair value will he
P20,000 at the end of its 8-year life. Entity A regularly uses
straight-line depreciation on similar equipment. For the year
ended December 31, 20x9, what amount should Entity A
recognize as depreciation expense on the leased asset?
a. 48,000
b. 46,000
с. 30,000
d. 27,500
(AICPA)
8. Entity A leases computer equipment to customers under
direct-financing leases. The equipment has no residual value
at the end of the lease and the leases do not contain bargali
purchase options. Entity A wishes to earn 8% interest on a
five-year lease of equipment with a fair value of P323,400. Te
first rental payment is due at the lease commencement. am
is the total amount of interest revenue that Entity A W
over the life of the lease?
a. 51,600
b. 75,000
(AICPA)
c. 129,360
d. 139,450
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