On Jan 1, 2020, Soul Company leased machinery from Sister Company for a 10-year period. The useful life of the asset is 20 years. Equal annual payments under the lease are Php200,000 and are due on January 1 of each year starting Jan 1, 2020. The present value on Jan 1, 2020 of the lease payments over the lease term discounted at implicit interest rate of 10% was Php1,352,000. The lease provides for a transfer of title to the lessee upon expiration of the lease term.
On Jan 1, 2020, Soul Company leased machinery from Sister Company for a 10-year period. The useful life of the asset is 20 years. Equal annual payments under the lease are Php200,000 and are due on January 1 of each year starting Jan 1, 2020. The present value on Jan 1, 2020 of the lease payments over the lease term discounted at implicit interest rate of 10% was Php1,352,000. The lease provides for a transfer of title to the lessee upon expiration of the lease term.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
*attached is the problem
REQUIRED: choose the letter
- What is the lease liability on Dec. 31, 2020?
a. 1,352,000
b. 1,152,000
c. 1,067,200
d. 1,552,000
- What is the lease liability to be reported as non-current on Dec 31, 2020?
a. 1,215,920
b. 1,090,240
c. 1,067,200
d. 973,920
Transcribed Image Text:On Jan 1, 2020, Soul Company leased machinery from Sister Company
for a 10-year period. The useful life of the asset is 20 years. Equal annual
payments under the lease are Php200,000 and are due on January 1 of
each year starting Jan 1, 2020.
The present value on Jan 1, 2020 of the lease payments over the lease
term discounted at implicit interest rate of 10% was Php1,352,000.
The lease provides for a transfer of title to the lessee upon expiration
of the lease term.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education