On January 1, 2021, Red Company leased equipment by signing a four-year lease. Annual rentals of P1,200,000 are payable at the beginning of each year starting January 1, 2021. Red guarantees the residual value of P400,000 at the end of the lease term. The useful life of the equipment is 5 years with estimated scrap value of P100,000. Red uses straight-line method of depreciation. The interest implicit in the lease is 10%. The present value factors are: PV of 1 discounted at 10% for 4 periods---------0.68301 PV of 1 discounted at 10% for 5 periods---------0.62092 PV of annuity due of 1 for 4 periods at 10%------3.48685 PV of 1 ordinary annuity at 10% for 4 periods---3.16987 What was the carrying value of the right-of-use equipment at December 31, 2021?
On January 1, 2021, Red Company leased equipment by signing a four-year lease. Annual rentals of P1,200,000 are payable at the beginning of each year starting January 1, 2021. Red guarantees the residual value of P400,000 at the end of the lease term. The useful life of the equipment is 5 years with estimated scrap value of P100,000. Red uses straight-line method of
PV of 1 discounted at 10% for 4 periods---------0.68301
PV of 1 discounted at 10% for 5 periods---------0.62092
PV of annuity due of 1 for 4 periods at 10%------3.48685
PV of 1 ordinary annuity at 10% for 4 periods---3.16987
What was the carrying value of the right-of-use equipment at December 31, 2021?
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