In the long-term liabilities of its balance sheet at December 31, 2020, ABC Company reported a lease liability of P75,000, net of current portion of P1,364. Payments of 9,000 were made both on January 2, 2020 and January 2, 2021. ABC's incremental borrowing rate on the date of the lease was 11%, and the lessor's implicit rate, which was known to ABC was 10%. In its December 31, 2020, balance sheet, what amount should ABC report as lease liability, net of current portion?

In the long-term liabilities of its balance sheet at December 31, 2020, ABC Company reported a lease liability of P75,000, net of current portion of P1,364. Payments of 9,000 were made both on January 2, 2020 and January 2, 2021. ABC's incremental borrowing rate on the date of the lease was 11%, and the lessor's implicit rate, which was known to ABC was 10%. In its December 31, 2020, balance sheet, what amount should ABC report as lease liability, net of current portion?

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

In the long-term liabilities of its balance sheet at December 31, 2020, ABC Company reported a lease liability of P75,000, net of current portion of P1,364.
Payments of 9,000 were made both on January 2, 2020 and January 2, 2021. ABC's incremental borrowing rate on the date of the lease was 11%, and the
lessor's implicit rate, which was known to ABC was 10%. In its December 31, 2020, balance sheet, what amount should ABC report as lease liability, net of
current portion?

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