Problem 2 On January 1, 2022, Miller Textiles leased a cutting machine from Good Machinery. The lease is for five years with bargain purchase option of P100,000. It is reasonably certain that Miller will exercise the option at the end of the lease period. The machine has an estimated useful life of 8 years with zero residual value. The lease calls for Miller to make annual payments of P250,000 due at the beginning of each year. Miller uses the straight-line method of depreciation and pays 10% interest on borrowed money. The lease contract also requires Miller to make additional variable lease payments based on the increase in consumer price index (CPI) at the start of each year compared to the CPI on January 1, 2021. The CPI is 110 on January, 2022, and 120 on January 1, 2023. 26. What is the balance of lease liability after remeasurement and payment on January 1, 2023?

Problem 2 On January 1, 2022, Miller Textiles leased a cutting machine from Good Machinery. The lease is for five years with bargain purchase option of P100,000. It is reasonably certain that Miller will exercise the option at the end of the lease period. The machine has an estimated useful life of 8 years with zero residual value. The lease calls for Miller to make annual payments of P250,000 due at the beginning of each year. Miller uses the straight-line method of depreciation and pays 10% interest on borrowed money. The lease contract also requires Miller to make additional variable lease payments based on the increase in consumer price index (CPI) at the start of each year compared to the CPI on January 1, 2021. The CPI is 110 on January, 2022, and 120 on January 1, 2023. 26. What is the balance of lease liability after remeasurement and payment on January 1, 2023?

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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Current Attempt in Progress Windsor Leasing Group signs an agreement on January 1, 2022, to lease equipment to Cole plc. The following information relates to this agreement. 1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economiclife of 6 years. 2. The cost of the asset to the lessor is £275,000. The fair value of the asset at January 1, 2022, is £275,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of £24,335, none of which is guaranteed. 4. The agreement requires equal annual rental payments, beginning on January 1, 2022. 5. Collectibility of the lease payments by Windsor is probable. Click here to view factor tables. (a) Assuming the lessor desires an 8% rate of return on its investment, calculate the amount of the annual rental payment required. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and…
Problem 1 At the beginning of 2022, EVS Industries acquired a machine with fair value of P6,074,700 by signing a 4-year lease, which is the expected useful life of the machine passing. The lease is payable in four equal annual payments of P2 million at the end of each year. The implicit rate in the lease is 12% 23. What is EVS's lease liability at December 31, 2023?