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On Dec.31, 2021, Splinter Company leased equipment from Land Company with the following date: - The estimated seven-year useful equipment life coincides with the lease term - The first year of the seven equal annual Php800,000 lease payments was paid on Dec. 31, 2021. - The implicit interest rate is 12%. - Splinter's incremental borrowing rate is 14%. - PV of an annuity of 1 in advance for 7 periods is 5.11 at 12%. - PV of an annuity of 1 in advance for 7 periods is 4.89 at 14%.

On Dec.31, 2021, Splinter Company leased equipment from Land Company with the following date: - The estimated seven-year useful equipment life coincides with the lease term - The first year of the seven equal annual Php800,000 lease payments was paid on Dec. 31, 2021. - The implicit interest rate is 12%. - Splinter's incremental borrowing rate is 14%. - PV of an annuity of 1 in advance for 7 periods is 5.11 at 12%. - PV of an annuity of 1 in advance for 7 periods is 4.89 at 14%.

FINANCIAL ACCOUNTING
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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What amount should be recorded as initial measurement of the right of use asset? *
*see attached pic
a. 5,600,000
b. 4,088,000
c. 3,912,000
d. 3,288,000

On Dec. 31, 2021, Splinter Company leased equipment from Land Company with the following date: - The estimated seven-year useful equipment life coincides with the lease term - The first year of the seven equal annual Php800,000 lease payments was paid on Dec. 31, 2021. - The implicit interest rate is 12%. - Splinter's incremental borrowing rate is 14%. - PV of an annuity of 1 in advance for 7 periods is 5.11 at 12%. - PV of an annuity of 1 in advance for 7 periods is 4.89 at 14%.
Transcribed Image Text:On Dec. 31, 2021, Splinter Company leased equipment from Land Company with the following date: - The estimated seven-year useful equipment life coincides with the lease term - The first year of the seven equal annual Php800,000 lease payments was paid on Dec. 31, 2021. - The implicit interest rate is 12%. - Splinter's incremental borrowing rate is 14%. - PV of an annuity of 1 in advance for 7 periods is 5.11 at 12%. - PV of an annuity of 1 in advance for 7 periods is 4.89 at 14%.
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