What amount should be reported as lease liability on Dec. 31, 2021? **see the attached pica. 5,600,000b. 4,088,000c. 3,912,000d. 3,288,000 On Dec. 31, 2021, Splinter Company leased equipment from Land Company with thefollowing date:- The estimated seven-year useful equipment life coincides with the lease term- The first year of the seven equal annual Php800,000 lease payments was paid onDec. 31, 2021.- The implicit interest rate is 12%.- Splinter's incremental borrowing rate is 14%.- PV of an annuity of 1 in advance for 7 periods is 5.11 at 12%.- PV of an annuity of 1 in advance for 7 periods is 4.89 at 14%.

Lease refers to a contract between two parties under which one party who is the real owner of an…

Answered: What amount should be reported as lease…

What amount should be reported as lease liability on Dec. 31, 2021? * *see the attached pic a. 5,600,000 b. 4,088,000 c. 3,912,000 d. 3,288,000

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

What amount should be reported as lease liability on Dec. 31, 2021? *
*see the attached pic
a. 5,600,000
b. 4,088,000
c. 3,912,000
d. 3,288,000

On Dec. 31, 2021, Splinter Company leased equipment from Land Company with the
following date:
- The estimated seven-year useful equipment life coincides with the lease term
- The first year of the seven equal annual Php800,000 lease payments was paid on
Dec. 31, 2021.
- The implicit interest rate is 12%.
- Splinter's incremental borrowing rate is 14%.
- PV of an annuity of 1 in advance for 7 periods is 5.11 at 12%.
- PV of an annuity of 1 in advance for 7 periods is 4.89 at 14%.

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