On January 1,2020, Cookie Company leased an equipment from Sydney Company for 8 years with annual lease payment of P100,000. First payment of P 100,000 was paid on January 1,2020 and subsequent payments are done every December 31, starting on December 31,2020. Also, based on the lease contract, the following are the terms and conditions: - The lease payment will increase every 2 years on the basis of the increase in the consumer price index for the next 2 years. - At the end of the lease term, there is a bargain purchase option of P 20,000. The implicit interest rate in the lease is 10%. At the commencement of the lease , the CPI is 110 and on January 1,2022, the CPI increase by 115.

On January 1,2020, Cookie Company leased an equipment from Sydney Company for 8 years with annual lease payment of P100,000. First payment of P 100,000 was paid on January 1,2020 and subsequent payments are done every December 31, starting on December 31,2020. Also, based on the lease contract, the following are the terms and conditions: - The lease payment will increase every 2 years on the basis of the increase in the consumer price index for the next 2 years. - At the end of the lease term, there is a bargain purchase option of P 20,000. The implicit interest rate in the lease is 10%. At the commencement of the lease , the CPI is 110 and on January 1,2022, the CPI increase by 115.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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