Miracle Company leased machinery for 10 years, its useful life, with effect from January 1, 2021. At that date, the fair value of the machinery was P4,900,000. Annual rentals of P700,000 are payable in advance on January 1 and the interest rate implicit in the lease is 9%. 1. What is the total lease liability which Miracle should recognize in its statement of financial position on December 31, 2021? 2. The rental payment on January 1, 2023 would reduce the finance lease liability by
Miracle Company leased machinery for 10 years, its useful life, with effect from January 1, 2021. At that date, the fair value of the machinery was P4,900,000. Annual rentals of P700,000 are payable in advance on January 1 and the interest rate implicit in the lease is 9%. 1. What is the total lease liability which Miracle should recognize in its statement of financial position on December 31, 2021? 2. The rental payment on January 1, 2023 would reduce the finance lease liability by
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Miracle Company leased machinery for 10 years, its useful life, with effect from January 1, 2021. At that date, the fair value of the machinery was P4,900,000. Annual rentals of P700,000 are payable in advance on January 1 and the interest rate implicit in the lease is 9%.
1. What is the total lease liability which Miracle should recognize in its statement of financial position on December 31, 2021?
2. The rental payment on January 1, 2023 would reduce the finance lease liability by
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