Steak Town Company leased equipment for its nine-year useful life, agreeing to pay P500,000 at the start of the lease term on December 31, 2020 and P500,000 annually on each December 31 for the next eight years. The present value on December 31, 2020 of the nine lease payments over the lease term, using the 10% rate implicit in the lease (known by Steak Town), was P3,165,000. What amount should Steak Town report as lease liability and interest expense, respectively in their December 31, 2022 financial statements?

Steak Town Company leased equipment for its nine-year useful life, agreeing to pay P500,000 at the start of the lease term on December 31, 2020 and P500,000 annually on each December 31 for the next eight years. The present value on December 31, 2020 of the nine lease payments over the lease term, using the 10% rate implicit in the lease (known by Steak Town), was P3,165,000. What amount should Steak Town report as lease liability and interest expense, respectively in their December 31, 2022 financial statements?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Which of the following alternatives represent the amount of non current liabilities in the statement of financial position of Shukela CC for the year ended 28 February20.19?
Planning Wizards, LLC is an event-planning company. Which of the following would be included in the current asset section of a classified balance sheet dated December 31, 2019? a. 15-month certificate of deposit b. Customer advances on New Year's parties c. Last month rent payment (lease expires in 2021) d. Investment in stocks, to be sold in 2020 e. Income tax refund receivable f. Inventory Select one: d, e, and f e and f a, b, c, e, and f a, b, c, d, e, and f b, e, f
Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Account Titles and Explanation Date 1/1/20 /1/20 2/31/20 /1/21 2/31/21 Lease Receivable Cost of Goods Sold Sales Revenue (To record the lease) Cash Lease Receivable (To record the receipt of lease payment) Lease Receivable Interest Revenue Cash Lease Receivable Lease Receivable Interest Revenue Debit 451,000.00 I Credit 451,000.00
1. What is the interest income to be reported from the note of Company A in the income statement for the year ended, December 31, 2020? 2. On December 31, 2020, what is the carrying value of the note received from Company A? 3. What should have been the ENTRY to record the receipt of note from Company B on October 1, 2020?
See attached picture C) What expenses related to this lease will Evans incur during the first year of the lease, and how will they be determined?
How will a 20-year lease obligation appear on the lessee's statement of financial position? a.as a long-term liability, only if an operating lease b.as a long-term liability, only if a finance lease c.as a long-term liability for any lease, operating or finance d.as a long-term asset for an operating lease
Under Fierce Company’s accounting system, all insurance premiums paid are charged to insurance expense. Information for the year ended December 31, 2020 is as follows: Prepaid insurance, beg. P150,000 Renewal of insurance charged to expense during the year applicable for the period April 1, 2020-2021 is P500,000. What is the insurance expense using the accrual basis accounting?
Reference to the accounting standard, explain how does the lease liability measured at lease inception?
Prepare Statement of Financial Position as of December 31, 2019.
See attached picture D) How should Evans report the lease transaction on its December 31, 2017 balance sheet?
Required:1. Prepare the adjustment to correct the estimated warranty liability on December 31, 2022.