Fact pattern
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Fact pattern
On January 1, 2019, Lessee enters into a 4-year lease of an asset for an annual rent of
P10,000 payable at the beginning of each year. The interest rate implicit in the lease is
10% while the lessee's incremental borrowing rate is 12%.
9. The initial measurement of the right-of-use asset is determined as follows: P10,000 x PV
of an ordinary annuity of P1 @10%, n=4.
10. The initial measurement of the lease liability is determined as follows: P10,000 x PV of
an annuity due of P1 @10%, n=4.
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