On January 1, 2021, Globe Company sold a piece of machinery to Troll Company for P2,400,000. Because of the entity’s commitments to its customers to provide their needs for the next three years, Globe Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows: • Fair value of machinery- P2,200,000 • Carrying amount of machinery- P1,700,000 • Remaining useful life of the machinery- 8 years • Lease term- 3 years • Annual rent payable at beginning of each year, starting on January 1, 2021- P500,000 • Market rate of interest- 10% • PV of an ordinary annuity of 1 at 10% for 3 periods is 2.4869 • PV of an annuity
On January 1, 2021, Globe Company sold a piece of machinery to Troll Company for P2,400,000. Because of the entity’s commitments to its customers to provide their needs for the next three years, Globe Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows:
• Fair value of machinery- P2,200,000
• Carrying amount of machinery- P1,700,000
• Remaining useful life of the machinery- 8 years
• Lease term- 3 years
• Annual rent payable at beginning of each year, starting on January 1, 2021- P500,000
• Market rate of interest- 10%
• PV of an ordinary annuity of 1 at 10% for 3 periods is 2.4869
• PV of an annuity due of 1 at 10% for 3 periods is 2.7355
What is the amount recorded by Globe Company for the right-of-use asset on January 1, 2021? (round off your final answer to the nearest peso value)
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