PROBLEM 6: Leased asset was PURCHASED by the lessee Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of P600,000 which is to be paid at the end of each year. The lease contract provides that the lessee has guaranteed a P100,000 residual value of the leased asset. The implicit interest rate in the lease is 10%. Assuming that at December 31, 2022, Lazy Company purchased the equipment for P1,300,000. REQUIRED: Prepare table of amortization and journal entries for the entire lease term.
PROBLEM 6: Leased asset was PURCHASED by the lessee Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of P600,000 which is to be paid at the end of each year. The lease contract provides that the lessee has guaranteed a P100,000 residual value of the leased asset. The implicit interest rate in the lease is 10%. Assuming that at December 31, 2022, Lazy Company purchased the equipment for P1,300,000. REQUIRED: Prepare table of amortization and journal entries for the entire lease term.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PROBLEM 6: Leased asset was PURCHASED by the lessee
Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of
P600,000 which is to be paid at the end of each year. The lease contract provides that the lessee has guaranteed a P100,000 residual
value of the leased asset. The implicit interest rate in the lease is 10%. Assuming that at December 31, 2022, Lazy Company
purchased the equipment for P1,300,000. REQUIRED: Prepare table of amortization and
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