lease and an estimated useful life of 12 years. The present value of the minimum lease payment is P480,000. A bargain option clause is provided. How much should Malu record as an asset called Right of Use Asset under present GAAP, and a corresponding liability at the beginning of the lease?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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help me to answer the question with supporting computation. thank you

1. How much should malu record as an asset called right of use asset under present gaap, and a corresponding liability at the beginning of the lease?

2. Assume this time it is an operating lease insted of a capital/finance lease, how much right of use asset should malu record at the beginning of the lease?

11. On July 1, 2020, Malu entered into a ten-year noncancellable lease with Ruth Corporation for a
machine that is owned by Ruth. The machine had a fair market value of P800,000 at the beginning of the
Transcribed Image Text:11. On July 1, 2020, Malu entered into a ten-year noncancellable lease with Ruth Corporation for a machine that is owned by Ruth. The machine had a fair market value of P800,000 at the beginning of the
lease and an estimated useful life of 12 years. The present value of the minimum lease payment is
P480,000. A bargain option clause is provided.
How much should Malu record as an asset called Right of Use Asset under present GAAP, and a
corresponding liability at the beginning of the lease?
Transcribed Image Text:lease and an estimated useful life of 12 years. The present value of the minimum lease payment is P480,000. A bargain option clause is provided. How much should Malu record as an asset called Right of Use Asset under present GAAP, and a corresponding liability at the beginning of the lease?
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