Problem 3: SALE AND LEASEBACK The following information were deemed relevant regarding a sale and leaseback agreement GEE Corp. entered into with EYCH Inc. of a heavy factory equipment on January 1, 2021: Selling Price of the Equipment - P1,500,000 Fair Market Value - P1,200,000 Carrying value on the books of GEE Corp. - P720,000 Remaining life of the equipment – 10years Lease back term - 8years Implicit lease rate - 12% Periodic annual rentals every December 31 - P 200,000 Required: 19. What is the carrying value of the lease liability as of December 31, 2021? 20. What is carrying value of the right of use asset as of December 31, 2021?
Problem 3: SALE AND LEASEBACK The following information were deemed relevant regarding a sale and leaseback agreement GEE Corp. entered into with EYCH Inc. of a heavy factory equipment on January 1, 2021: Selling Price of the Equipment - P1,500,000 Fair Market Value - P1,200,000 Carrying value on the books of GEE Corp. - P720,000 Remaining life of the equipment – 10years Lease back term - 8years Implicit lease rate - 12% Periodic annual rentals every December 31 - P 200,000 Required: 19. What is the carrying value of the lease liability as of December 31, 2021? 20. What is carrying value of the right of use asset as of December 31, 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Ive been rejected many times. Please answer in good accounting form thankyou
Transcribed Image Text:Problem 3: SALE AND LEASEBACK
The following information were deemed relevant regarding a sale and leaseback agreement GEE Corp. entered
into with EYCH Inc. of a heavy factory equipment on January 1, 2021:
Selling Price of the Equipment - P1,500,000
Fair Market Value - P1,200,000
Carrying value on the books of GEE Corp. - P720,000
Remaining life of the equipment – 10years
Lease back term - 8years
Implicit lease rate – 12%
Periodic annual rentals every December 31 - P 200,000
Required:
19. What is the carrying value of the lease liability as of December 31, 2021?
20. What is carrying value of the right of use asset as of December 31, 2021?
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