Use the following information for the next two items: On June 30, 2019, Ledsen Corporation leased a vehicle to Sleeping Co. Ledsen Corporation had purchased the vehicle on that day for its fair value of P89,721. The lease agreement, which cost Ledsen Corporation P1,457 to have drawn up, contained the following. Lease term - 4 years ▪ Economic life of vehicle - 6 years ▪ Annual payment, payable in advance on June 30 each year - P23,900 Estimated residual value at end of lease term - P15,000 ▪ Residual value guarantee - P7,500 Interest rate implicit in the lease (known to Sleeping) - 7% ▪ Sleeping's incremental borrowing rate - 8% Included in the annual payment is an amount of P1,900 to cover reimbursement for the costs of insurance and maintenance paid by the lessor. The asset will be returned to the lessor at the end of the lease term. Sleeping Co.'s fiscal year end is June 30. Note: Round off present value factors to four decimal places. Round off amounts to the nearest peso. Based on the information above, answer the following: 1. How much is the initial measurement of the right of use asset? 2. What is the current portion of the lease liability as at June 30, 2020?

Use the following information for the next two items: On June 30, 2019, Ledsen Corporation leased a vehicle to Sleeping Co. Ledsen Corporation had purchased the vehicle on that day for its fair value of P89,721. The lease agreement, which cost Ledsen Corporation P1,457 to have drawn up, contained the following. Lease term - 4 years ▪ Economic life of vehicle - 6 years ▪ Annual payment, payable in advance on June 30 each year - P23,900 Estimated residual value at end of lease term - P15,000 ▪ Residual value guarantee - P7,500 Interest rate implicit in the lease (known to Sleeping) - 7% ▪ Sleeping's incremental borrowing rate - 8% Included in the annual payment is an amount of P1,900 to cover reimbursement for the costs of insurance and maintenance paid by the lessor. The asset will be returned to the lessor at the end of the lease term. Sleeping Co.'s fiscal year end is June 30. Note: Round off present value factors to four decimal places. Round off amounts to the nearest peso. Based on the information above, answer the following: 1. How much is the initial measurement of the right of use asset? 2. What is the current portion of the lease liability as at June 30, 2020?

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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