3. At the beginning of 2020, VIXEN Company leased an equipment with the following information: Annual rental payable at the end of each year P450,000; residual value guarantee P50,000; Lease incentive received P20,000; Lease term 4 years; Useful life of the equipment 8 years; implicit interest rate 10%; present value of an ordinary annuity of 1 at 10% for 4 periods 3.17; present value of 1 at 10% for 4 periods 0.68. What is the cost of right of use asset? *

3. At the beginning of 2020, VIXEN Company leased an equipment with the following information: Annual rental payable at the end of each year P450,000; residual value guarantee P50,000; Lease incentive received P20,000; Lease term 4 years; Useful life of the equipment 8 years; implicit interest rate 10%; present value of an ordinary annuity of 1 at 10% for 4 periods 3.17; present value of 1 at 10% for 4 periods 0.68. What is the cost of right of use asset? *

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...

See similar textbooks

Similar questions

Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.
Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of 5,000 at the end of each of the next 5 years. Assume a prevailing interest rate of 15%. The present value of an ordinary annuity of 1 at 15% for 5 periods is 3.35. The future amount of an ordinary annuity of 1 at 15% for 5 periods is 6.74. The present value of 1 at 15% for 5 periods is 0.5. How much should Electro record as the cost of the machine? a. 12,500 b. 16,750 c. 25,000 d. 33,700
Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?
On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.
Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.
On May 1, 2019, a company purchased a new machine that it does not have to pay for until May 1, 2021. The total payment on May 1,2021, will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine would be the total payment multiplied by what time value of money concept? a. future value of annuity of 1 b. future value of 1 c. present value of annuity of 1 d. present value of 1
At the beginning of 2020, Trump Company leased an equipment with thefollowing information: Annual rental payable at the end of each yearP450,000; residual value guarantee P50,000; Lease incentive receivedP20,000; Lease term 4 years; Useful life of the equipment 8 years; implicitinterest rate 10%; present value of an ordinary annuity of 1 at 10% for 4periods 3.17; present value of 1 at 10% for 4 periods 0.68. What is the costof right of use asset? A. P1,440,500B. P1,460,500C. P1,456,500D. P1,830,000
At the beginning of 2020, Trump Company leased an equipment with the following information: Annual rental payable at the end of each year P450,000; residual value guarantee P50,000; Lease incentive received P20,000; Lease term 4 years; Useful life of the equipment 8 years; implicit interest rate 10%; present value of an ordinary annuity of 1 at 10% for 4 periods 3.17; present value of 1 at 10% for 4 periods 0.68. What is the cost of right of use asset? P1,440,500 P1,460,500 P1,456,500 P1,830,000 An entity computed its pre-tax income in its GAAP compliant books at P2,450,000 while its income per income tax return properly computed at P2,850,000. There has been a temporary difference causing the discrepancy between the two amounts. The tax rate is 30%. How much is the Deferred Tax Liability of the company to be presented in its statement of financial position? P120,000 P855,000 P735,000 P0
3. At the beginning of 2020, VIXEN Company leased an equipment with the following information: Annual rental payable at the end of each year ₱450,000; residual value guarantee ₱50,000; Lease incentive received ₱20,000; Lease term 4 years; Useful life of the equipment 8 years; implicit interest rate 10%; present value of an ordinary annuity of 1 at 10% for 4 periods 3.17; present value of 1 at 10% for 4 periods 0.68. What is the cost of right of use asset?
On January 1, 2020, Beatrice Company sold an equipment with a remaining life of 20 years and immediately lease it back for a period of 5 years. Below are the relevant data:· Sale price at above fair value: P20,000,000· Fair value of building: 18,000,000· Carrying amount of building: 10,800,000· Annual rental payable at the end of each year: 1,500,000· Implicit rate: 12%PV factor for an ordinary annuity at 12% for five periods is 3.60. How much shall the buyer-lessor recognize as gross rental income and depreciation of the building, respectively? a. 555,556 ; 900,000 b. 944,444 ; 900,000 c. 555,556 ; 1,000,000 d. 944,444 ; 3,600,000
On January 1, 2020, Mya & Co, sold a machinery and immediately leases it back for a period of 4 years. Remaining useful life of the machinery is 10 years. Selling price is P3,000,000. Carrying amount of the machinery is P2,250,000. Annual rental is P400,000 payable every December 31, starting December 31, 2020. Implicit rate is 10% and PV factor for ordinary annuity at 10% for 4 periods is 3.169865. If the fair value of the sold and leased asset is P2,800,000, what amount of gain/loss related to the right transferred shall be recognized by the seller-lessee? a. 340,225 b. 209,775 c. 550,000 d. None
On January 1, 2020, Tamia & Co, sold a machinery and immediately leases it back for a period of 4 years. Remaining useful life of the machinery is 10 years. Selling price is P3,000,000. Carrying amount of the machinery is P2,250,000. Annual rental is P400,000 payable every December 31, starting December 31, 2020. Implicit rate is 10% and PV factor for ordinary annuity at 10% for 4 periods is 3.169865. If the fair value of the sold and leased asset is P3,200,000, what amount of gain/loss related to the right transferred shall be recognized by the seller-lessee? a. Zero b. 950,000 c. 435,796 d. 514,204