January 1, 2022, Tiktok Company leased a heavy equipment to be used in its construction business. The following information relates to the lease: Lease term -10 years Useful life of the equipment - 12 years Annual rental payable in advance every January 1 - P240,000 Implicit interest rate - 14% Incremental borrowing rate - 12% Tiktok has the option to purchase the leased asset by paying P400,000, which approximates the fair value of the equipment on the option exercise date. (Round off the PV factor to four decimal places) What is the cost of the right-of-use asset?

January 1, 2022, Tiktok Company leased a heavy equipment to be used in its construction business. The following information relates to the lease: Lease term -10 years Useful life of the equipment - 12 years Annual rental payable in advance every January 1 - P240,000 Implicit interest rate - 14% Incremental borrowing rate - 12% Tiktok has the option to purchase the leased asset by paying P400,000, which approximates the fair value of the equipment on the option exercise date. (Round off the PV factor to four decimal places) What is the cost of the right-of-use asset?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 6P: Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a...

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