Homework Help is Here – Start Your Trial Now!
Business
Accounting
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? -

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Show me the correct solution pleasee. thanks

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: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
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
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
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Valuing Decision
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS