*attached is the problemREQUIRED: choose the letter What is the interest expense for 2020? a. 200,000b. 115,200c. 106,720d. 0What is the depreciation for 2020?a. 135,200b. 115,200c. 67,600d. 20,000 On Jan 1, 2020, Soul Company leased machinery from Sister Companyfor a 10-year period. The useful life of the asset is 20 years. Equal annualpayments under the lease are Php200,000 and are due on January 1 ofeach year starting Jan 1, 2020.The present value on Jan 1, 2020 of the lease payments over the leaseterm discounted at implicit interest rate of 10% was Php1,352,000.The lease provides for a transfer of title to the lessee upon expirationof the lease term.

As the lease was capitalized in the books, hence an interest expense and depreciation expense will…

Answered: REQUIRED: choose the letter What is…

REQUIRED: choose the letter What is the interest expense for 2020? a. 200,000 b. 115,200 c. 106,720 d. 0 What is the depreciation for 2020? a. 135,200 b. 115,200 c. 67,600

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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Question

*attached is the problem

REQUIRED: choose the letter

What is the interest expense for 2020?

a. 200,000
b. 115,200
c. 106,720
d. 0

What is the depreciation for 2020?

a. 135,200
b. 115,200
c. 67,600
d. 20,000

On Jan 1, 2020, Soul Company leased machinery from Sister Company
for a 10-year period. The useful life of the asset is 20 years. Equal annual
payments under the lease are Php200,000 and are due on January 1 of
each year starting Jan 1, 2020.
The present value on Jan 1, 2020 of the lease payments over the lease
term discounted at implicit interest rate of 10% was Php1,352,000.
The lease provides for a transfer of title to the lessee upon expiration
of the lease term.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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