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WITH SOLUTION/COMPUTATION 52. On January 2, 2019, Ashe Company entered into a ten-year non-cancellable lease requiring year-end payments of P100,000. Ashe’s incremental borrowing rate is 12% while the lessor’s implicit interest rate, known to Ashe, is 10%. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Ashe capitalize for this leased property on January 2, 2019? a.    1,000,000        b. 614,500            c. 565,000        d. 0

WITH SOLUTION/COMPUTATION 52. On January 2, 2019, Ashe Company entered into a ten-year non-cancellable lease requiring year-end payments of P100,000. Ashe’s incremental borrowing rate is 12% while the lessor’s implicit interest rate, known to Ashe, is 10%. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Ashe capitalize for this leased property on January 2, 2019? a.    1,000,000        b. 614,500            c. 565,000        d. 0

FINANCIAL ACCOUNTING
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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   WITH SOLUTION/COMPUTATION

52. On January 2, 2019, Ashe Company entered into a ten-year non-cancellable lease requiring year-end payments of P100,000. Ashe’s incremental borrowing rate is 12% while the lessor’s implicit interest rate, known to Ashe, is 10%. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Ashe capitalize for this leased property on January 2, 2019?


a.    1,000,000        b. 614,500            c. 565,000        d. 0

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