ncremental borrowing rate was 12% and the interest rate implicit in the lease, which was known by Din, was 9%. The following are the rounded present value factors for an annuity due: 9% for 7 years 5.5
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
On Dec. 31, 2014, Din Corp. signed a 7 -year finance lease for an airplane to transport its sport item around the country. The airplane's fair value was P 8,415,000. Din made the first annual lease payment of P 1,530,000 on Dec. 31, 2014. Din's incremental borrowing rate was 12% and the interest rate implicit in the lease, which was known by Din, was 9%. The following are the rounded present value factors for an annuity due: 9% for 7 years 5.5 12 % for 7 years 5.1
REQUIREMENTS:
1. What amount should Din report as finance lease liability in its Dec. 31, 2015
2.What amount of interest expense for Dec. 31, 2015?*
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