ow much is the cost of the right of use asset at the inception of the lease? (All required entries are to be written in the columnar worksheet together with the computations and the computation of the right of use asset that is written in the google form.
How much is the cost of the right of use asset at the inception of the lease? (All required entries are to be written in the columnar worksheet together with the computations and the computation of the right of use asset that is written in the google form.
Lease term 10 years
Annual rental payable at the end of each term P240,000
Estimated life of machine 12 years
Implicit interest rate 10%
Present value of an annuity of P1 for 10 period at 10% 6.145
Present value of 1 at 10% for 10 periods 0.386
Unguaranteed residual value 150,000
Payment to lessor to obtain a long term lease 30,000
Annual maintenance cost 35,000
The lease provided for neither a transfer of title to the lease nor a purchase option.
Prepare all entries in the books of Chlorine Compant related to the lease for the years 2018,2019,2020.
Compute the cost of the right of use asset at the inception of the lease.
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