On January 1, 2020 an entity entered into a lease for commercial space with the following information: Annual rental payable at the end of each year P200,000; Lease term for 5 years; Implicit rate in the lease for 9%. On January 1, 2022, the entity and the lessor agreed to amend the original lease by extending the lease by 3 more years with the following information: Annual rental payable at end of each year beginning December 31, 2022 for P200,000 and an implicit rate in the lease for 11%. Compute for the carrying value of the right of use asset on December 31, 2022. (Use four decimal places for your present value ex:1.3284) A. 806,658
On January 1, 2020 an entity entered into a lease for commercial space with the following information: Annual rental payable at the end of each year P200,000; Lease term for 5 years; Implicit rate in the lease for 9%. On January 1, 2022, the entity and the lessor agreed to amend the original lease by extending the lease by 3 more years with the following information: Annual rental payable at end of each year beginning December 31, 2022 for P200,000 and an implicit rate in the lease for 11%. Compute for the carrying value of the right of use asset on December 31, 2022. (Use four decimal places for your present value ex:1.3284) A. 806,658
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020 an entity entered into a lease for commercial space with the following information: Annual rental payable at the end of each year P200,000; Lease term for 5 years; Implicit rate in the lease for 9%. On January 1, 2022, the entity and the lessor agreed to amend the original lease by extending the lease by 3 more years with the following information: Annual rental payable at end of each year beginning December 31, 2022 for P200,000 and an implicit rate in the lease for 11%. Compute for the carrying value of the right of use asset on December 31, 2022. (Use four decimal places for your present value ex:1.3284)
A. 806,658
B. 466,800
C. 672,215
D. 622,400
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