PROBLEM 20-5: Initial measurement - Investment property leased under finance lease On January 1, 2016, Rachel Company leased a building from Goldemayre Company for the purpose of letting out to tenants. The lease is properly classified as finance lease under PAS 17 Leases. The fair value of the building on January 1 and December 31 is P3.5 million and P4 million, respectively. The present value of the minimum lease payment computed based on the implicit interest rate of 12% is P3.2 million. What should be the amount to be recorded by Rachel Company on January 1. 2016 as investment property?
PROBLEM 20-5: Initial measurement - Investment property leased under finance lease On January 1, 2016, Rachel Company leased a building from Goldemayre Company for the purpose of letting out to tenants. The lease is properly classified as finance lease under PAS 17 Leases. The fair value of the building on January 1 and December 31 is P3.5 million and P4 million, respectively. The present value of the minimum lease payment computed based on the implicit interest rate of 12% is P3.2 million. What should be the amount to be recorded by Rachel Company on January 1. 2016 as investment property?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
ACCOUNTING FOR INVESTMENT PROPERTY.PROBLEM 2. PLEASE ANSWER AND SHOW SOLUTION
Transcribed Image Text:PROBLEM 20-5: Initial measurement - Investment property leased under
finance lease
On January 1, 2016, Rachel Company leased a building from Goldemayre
Company for the purpose of letting out to tenants. The lease is properly
classified as finance lease under PAS 17 Leases. The fair value of the building on
January 1 and December 31 is P3.5 million and P4 million, respectively. The
present value of the minimum lease payment computed based on the implicit
interest rate of 12% is P3.2 million.
What should be the amount to be recorded by Rachel Company on January 1.
2016 as investment property?
с. РЗ.5 million
d. P3 million
а.
P4 million
b. Р3.2 million
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education