Ussop Company purchased an equipment on January 1, 2020 for P 3,000,000 cash for the purpose of leasing it. The machine is expected to have a 10-year life from the date of purchase. On April 1, 2020, the equipment was leased to Brook Company for a three-year period, at a monthly rental of P 40,000, payable at the end of every month. Additionally, Brook Company paid P 120,000 to Ussop Company on April 1, 2020 as a lease bonus. Ussop Company paid repairs of P 20,000 relating to 2020. Required: 1. Prepare journal entries on the books of the lessee and lessor following the operating lease concept.
Ussop Company purchased an equipment on January 1, 2020 for P 3,000,000 cash for the purpose of leasing it. The machine is expected to have a 10-year life from the date of purchase. On April 1, 2020, the equipment was leased to Brook Company for a three-year period, at a monthly rental of P 40,000, payable at the end of every month. Additionally, Brook Company paid P 120,000 to Ussop Company on April 1, 2020 as a lease bonus. Ussop Company paid repairs of P 20,000 relating to 2020. Required: 1. Prepare journal entries on the books of the lessee and lessor following the operating lease concept.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ussop Company purchased an equipment on January 1, 2020 for P 3,000,000 cash for the purpose of leasing it. The machine is expected to have a 10-year life from the date of purchase.
On April 1, 2020, the equipment was leased to Brook Company for a three-year period, at a monthly rental of P 40,000, payable at the end of every month.
Additionally, Brook Company paid P 120,000 to Ussop Company on April 1, 2020 as a lease bonus. Ussop Company paid repairs of P 20,000 relating to 2020.
Required:
1. Prepare
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