Problem 12-3 (AICPA Adapted)On March 20, 2020, Barnes Company purchased a machine for P2,400,000 for the purpose of leasing itto others.The machine is expected to have a 10-year life and no residual value. It will be depreciated on thestraight line basis computed to the nearest month.The machine was leased to Rally Company on April 1, 2020 tor four years, at a monthly rental ofP36,000.There is no provision for renewal of the lease or purchase of the machine by the lessee upon expirationot the lease.Barnes Company paid P120,000 initial direct costs associated with negotiating the lease in March 2020.Required:1. Prepare journal entries on the books of the lessor for 2020.2. Present the machinery in the statement of financial position of Barnes Company on December 31,2020.

When straight line method of depreciation is used The formula is Cost of the asset - Salvage value…

roblem 12-3 (AlCPA Adapted) On March 20, 2020, Barnes Company purchased a machine for P2,400,000 for the purpose of leasing it p others. he machine is expected to have a 10-year life and no residual value. It will be depreciated on the traight line basis computed to the nearest month. he machine was leased to Rally Company on April 1, 2020 tor four years, at a monthly rental of 36,000. here is no provision for renewal of the lease or purchase of the machine by the lessee upon expiration t the lease. arnes Company paid P120,000 initial direct costs associated with negotiating the lease in March 2020. cequired: - Prepare journal entries on the books of the lessor for 2020. . Present the machinery in the statement of financial position of Barnes Company on December 31, 020.

roblem 12-3 (AlCPA Adapted) On March 20, 2020, Barnes Company purchased a machine for P2,400,000 for the purpose of leasing it p others. he machine is expected to have a 10-year life and no residual value. It will be depreciated on the traight line basis computed to the nearest month. he machine was leased to Rally Company on April 1, 2020 tor four years, at a monthly rental of 36,000. here is no provision for renewal of the lease or purchase of the machine by the lessee upon expiration t the lease. arnes Company paid P120,000 initial direct costs associated with negotiating the lease in March 2020. cequired: - Prepare journal entries on the books of the lessor for 2020. . Present the machinery in the statement of financial position of Barnes Company on December 31, 020.

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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