On December 31, 2022, Day Company leased a new machine from Parr with the following pertinen information: Lease term Annual rental payable in beginning of each year Useful life of machine Implicit interest rate in lease Present value of an annuity of 1 in advance for 6 periods at 12% Present value of an ordinary annuity of 1 for 6 periods at 12% 6 years 500,000 8 years 12% 4.60 4.11 The lese is not renewable, and the machine reverts to Parr at the termination of the lease. The cost o the machine on Parr's accounting records is P3,755,000. At the beginning of the lease term, Day should record a lease liability of a. 2,055,000 b. 2,300,000 c. 3,755,000 d. 2,800,000

On December 31, 2022, Day Company leased a new machine from Parr with the following pertinen information: Lease term Annual rental payable in beginning of each year Useful life of machine Implicit interest rate in lease Present value of an annuity of 1 in advance for 6 periods at 12% Present value of an ordinary annuity of 1 for 6 periods at 12% 6 years 500,000 8 years 12% 4.60 4.11 The lese is not renewable, and the machine reverts to Parr at the termination of the lease. The cost o the machine on Parr's accounting records is P3,755,000. At the beginning of the lease term, Day should record a lease liability of a. 2,055,000 b. 2,300,000 c. 3,755,000 d. 2,800,000

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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