Problem 4 At the beginning of current year, Enhypen Company sold an equipment with remaining useful life of 10 years and immediately leased it back for 5 years. Sales price at above fair value Fair value of equipment Carrying amount of equipment Annual rental payable at the end of each year Implicit interest rate Present value of an ordinary annuity of 1 at 10% for 5 periods 5,700,000 5,000,000 4,500,000 500,000 10% 3.79 1. What amount should be recognized as initial lease liability? 2. What amount should be recognized as cost of right of use asset? 3. What amount should be recognized as cost of right of use asset? 4. What amount should be recognized as annual rental income of the buver-lessor?

Problem 4 At the beginning of current year, Enhypen Company sold an equipment with remaining useful life of 10 years and immediately leased it back for 5 years. Sales price at above fair value Fair value of equipment Carrying amount of equipment Annual rental payable at the end of each year Implicit interest rate Present value of an ordinary annuity of 1 at 10% for 5 periods 5,700,000 5,000,000 4,500,000 500,000 10% 3.79 1. What amount should be recognized as initial lease liability? 2. What amount should be recognized as cost of right of use asset? 3. What amount should be recognized as cost of right of use asset? 4. What amount should be recognized as annual rental income of the buver-lessor?

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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