Zhongli Co. (lessee) entered into a contract of lease with Rex Lapis Co. (lessor) that allows Zhongli to occupy a parcel of land owned by Rex Lapis. The following terms were agreed on January 1, 2020: • P300,000 annual rental, the first payment of which will start on December 31, 2020 and every December 31 hereafter, for a total of 5 payments. • Implicit rate of the lease was 12%, while the incremental borrowing rate of Zhongli was 10%. • The present value factors of an ordinary annuity for 5 periods are: 10% 3.7908 12% 3.6048 Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) a. What amount of lease liability will be recorded by Zhongli on January 1, 2020? b. Prepare an amortization table for the lease liability. c. Prepare the journal entries in the books of Zhongli for the year 2020
Zhongli Co. (lessee) entered into a contract of lease with Rex Lapis Co. (lessor) that allows Zhongli to
occupy a parcel of land owned by Rex Lapis. The following terms were agreed on January 1, 2020:
• P300,000 annual rental, the first payment of which will start on December 31, 2020 and every
December 31 hereafter, for a total of 5 payments.
• Implicit rate of the lease was 12%, while the incremental borrowing rate of Zhongli was 10%.
• The present value factors of an ordinary annuity for 5 periods are:
10% 3.7908
12% 3.6048
Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)
a. What amount of lease liability will be recorded by Zhongli on January 1, 2020?
b. Prepare an amortization table for the lease liability.
c. Prepare the
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