On December 31, 2018, Welington Company leased a new machine from Daniel with the following pertinent information: Lease term 6 years Annual rental payable at beginning of each lease year P50,000 Useful life of the machine 8 years Welington's increment borrowing rate 15% Implicit interest rate in lease (known by Welington) 12% The lease is renewable, and the machine reverts to Daniel at the termination of the lease. The cost of the machine on Daniel's accounting records is P375,500. At the inception of the lease, Welington should record a lease liability of:
On December 31, 2018, Welington Company leased a new machine from Daniel with the following pertinent information: Lease term 6 years Annual rental payable at beginning of each lease year P50,000 Useful life of the machine 8 years Welington's increment borrowing rate 15% Implicit interest rate in lease (known by Welington) 12% The lease is renewable, and the machine reverts to Daniel at the termination of the lease. The cost of the machine on Daniel's accounting records is P375,500. At the inception of the lease, Welington should record a lease liability of:
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:On December 31, 2018, Welington Company
leased a new machine from Daniel with the
following pertinent information:
Lease
term
6
years
Annual rental payable at
beginning of each lease year
P50,000
Useful life of the
machine
8 years
Welington's increment borrowing
rate
15%
Implicit interest rate in lease
(known by Welington)
12%
The lease is renewable, and the machine
reverts to Daniel at the termination of the
lease. The cost of the machine on Daniel's
accounting records is P375,500. At the
inception of the lease, Welington should record
a lease liability of:
Use 2 decimal points in computing for the PV
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