On January 1, 2021, DIXIE KONG Corp. leased six computers for use of Accountancy Department. The lease period is five years, and the estimated economic life of the leased property is six years. The lease does not contain automatic title transfer and purchase option. Annal lease payments are payable in advance every January 1 in the amount of P90,000. The incremental borrowing rate for DIXIE KONG Corp. is 12% and the implicit rate known to DIXIE KONG is 10%. The company uses straight-line depreciation for this type of asset.
On January 1, 2021, DIXIE KONG Corp. leased six computers for use of Accountancy Department. The lease period is five years, and the estimated economic life of the leased property is six years. The lease does not contain automatic title transfer and purchase option. Annal lease payments are payable in advance every January 1 in the amount of P90,000. The incremental borrowing rate for DIXIE KONG Corp. is 12% and the implicit rate known to DIXIE KONG is 10%. The company uses straight-line depreciation for this type of asset.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Under leases
Transcribed Image Text:Independent from numbers, 6 to 9,
assuming that the lease provides for an
option to DIXIE KONG to purchase the
leased assets at a price of P30,000 at the
end of the lease term and it is reasonably
certain that DIXIE KONG will exercise the
option. What is the interest expense for
2021?
For numbers 6 to 10, please refer to the following problem:
On January 1, 2021, DIXIE KONG Corp. leased six computers for use of Accountancy Department.
The lease period is five years, and the estimated economic life of the leased property is six years.
The lease does not contain automatic title transfer and purchase option. Annal lease payments are
payable in advance every January 1 in the amount of P90,000. The incremental borrowing rate for
DIXIE KONG Corp. is 12% and the implicit rate known to DIXIE KONG is 10%. The company uses
straight-line depreciation for this type of asset.
Round off PV factors to two decimal places.
а. 30,390
b. 28,530
с. 35,973
d. 26,973
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