Answered: What is Daniel's right of use of asset…

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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Welington Company purchased a new machine for P4,800,000 on January 1, 2016 and leased the same to Daniel. The machine has an estimated 12-year life, and will be depreciated P400,000 per year. The lease if for a three-year period expiring January 1, 2019, at an annual rental of P850,000. The implicit rate on the lease is 12%. Additionally, Daniel paid P300,000 to Welington as a lease bonus to obtain the three-year lease. For 2016, Daniel incurred insurance expense of P80,000 for the leased machine. What is Daniel's right of use of asset at December 31, 2016? Use 2 decimal points in computing for the PV

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