Problem 2: FINANCE LEASE CASE 1: On January 1, 2020, EEE Corp. leased a warehouse for 5 years at an annual rental of P575,000 payable every December 31. The equipment had an estimated life of 8 years and shall revert back to the lessor at the expiration of the lease term. The lessee paid the lessor a lease bonus of P250,000 and was also responsible as per the lease agreement to pay the broker fees and commission amounting to P180,00o. As an incentive however, the lessor shall reimburse EEE Corp. 75% of the said initial direct cost. The implicit lease rate known to both parties was at 12% while EEE Corporation's incremental borrowing rate was at 10%. Requirements: (Use a PV FACTOR rounded off to 4 decimal places) 8. Depreciation expense on the Right of Use Asset in 2020 (under Straight Line Method) 9. Carrying value of the Right of Use Asset as of December 31, 2021
Problem 2: FINANCE LEASE CASE 1: On January 1, 2020, EEE Corp. leased a warehouse for 5 years at an annual rental of P575,000 payable every December 31. The equipment had an estimated life of 8 years and shall revert back to the lessor at the expiration of the lease term. The lessee paid the lessor a lease bonus of P250,000 and was also responsible as per the lease agreement to pay the broker fees and commission amounting to P180,00o. As an incentive however, the lessor shall reimburse EEE Corp. 75% of the said initial direct cost. The implicit lease rate known to both parties was at 12% while EEE Corporation's incremental borrowing rate was at 10%. Requirements: (Use a PV FACTOR rounded off to 4 decimal places) 8. Depreciation expense on the Right of Use Asset in 2020 (under Straight Line Method) 9. Carrying value of the Right of Use Asset as of December 31, 2021
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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