Jackie Chan Leasing signs an equipment lease contract with Chris Tucker on January 1, 2020. The following information pertains to the lease. Lease term Equipment's useful life Bargain option price Implicit rate, known by Chris Tucker Fair value of the asset at January 1, 2020 Estimated recoverable value at the end of 5 years Estimated residual value at the end of 6 years (a) 5 years 6 years P40,000 10% The cost of the asset to Jackie Chan Leasing is P600,000. Chris Tucker uses the sum-of-the years' digit method to depreciate this type of equipment. Annual lease payments are made at the beginning of each year, starting January 1, 2020. REQUIRED: ...(b) P600,000 P80,000 P20,000 Give the entries in the books of Chris Tucker for years 2020 and 2021 as a result of the lease contract. Give the entries in the books of Jackie Chan Leasing for years 2020 and 2021.

Jackie Chan Leasing signs an equipment lease contract with Chris Tucker on January 1, 2020. The following information pertains to the lease. Lease term Equipment's useful life Bargain option price Implicit rate, known by Chris Tucker Fair value of the asset at January 1, 2020 Estimated recoverable value at the end of 5 years Estimated residual value at the end of 6 years (a) 5 years 6 years P40,000 10% The cost of the asset to Jackie Chan Leasing is P600,000. Chris Tucker uses the sum-of-the years' digit method to depreciate this type of equipment. Annual lease payments are made at the beginning of each year, starting January 1, 2020. REQUIRED: ...(b) P600,000 P80,000 P20,000 Give the entries in the books of Chris Tucker for years 2020 and 2021 as a result of the lease contract. Give the entries in the books of Jackie Chan Leasing for years 2020 and 2021.

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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