In the long-term liabilities section of its balance sheet at December 31, 2016, Naruto Company reported a lease obligation of P750,000, net of current portion of P13,636. Payments of P90,000 were made on both January 2, 2017 and January 2, 2018. Naruto's incremental borrowing rate on the date of lease was 11% and the lessor's implicit rate, which was known to Sasuke, was 10%. In its December 31, 2018 balance sheet, what amount should Naruto report as capital lease obligation, net of current portion? Round amounts to the nearest peso.
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- In the long-term liabilities section of its balance sheet at December 31, 2016, Welington Company reported a lease obligation of P750,000, net of current portion of P13,636. Payments of P90,000 were made on both January 2, 2017 and January 2, 2018. Welington’s incremental borrowing rate on the date of lease was 11% and the lessor’s implicit rate, which was known to Welington, was 10%. In its December 31, 2018 balance sheet, what amount should Welington report as capital lease obligation, net of current portion? Round amounts to the nearest peso.In the long-term liabilities section of its balance sheet atDecember 31, 2019, Gwapo Kaayo Co. reported a lease liability of₱75,000, net of current portion of ₱1,364. Payments of ₱9,000 weremade on both January 2, 2020, and January 2, 2021. Gwapo Kaayo’sincremental borrowing rate on the date of the lease was 11% and thelessor's implicit rate, which was known to Gwapo Kaayo, was 10%.In its December 31, 2x20, balance sheet, what amount should GwapoKaayo report as lease liability, net of current portion?On March 31, 2016, Southwest Gas leased equipment from a supplier and agreed to pay $200,000 annually for 20 years beginning March 31, 2017. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Southwest recorded a $2,293,984 lease liability. Required: Determine the interest rate implicit in the lease agreement.
- On January 1, 2016, an entity entered into a four-year operating lease. The payments were as follows: P20,000 for 2016; P18,000 for 2017; P16,000 for 2018 and P14,000 for 2019. What is the correct amount of lease expense for 2019? 20,500 19,000 14,000 18,000 17,000On January 1, 2014, KAR Co. . a lessee, signed a 10-year non cancelable lease for a machine stipulating annual payments of P 200,000. The first payment was made on January 1, 2014. KAR approximately treated this transaction as a finance lease. The ten lease payments have a present value of P 1,350,000 at January 1, 2014, based on implicit interest of 10%. For the year ended Dec. 31, 2014, how much should KAR record as interest expense?On January 1, 2016, Blaugh Co. signed a long-term lease for an office building. The terms of the lease requiredBlaugh to pay $10,000 annually, beginning December 30, 2016, and continuing each year for 30 years. Thelease qualifies as a capital lease. On January 1, 2016, the present value of the lease payments is $112,500 at the8% interest rate implicit in the lease. In Blaugh’s December 31, 2016, balance sheet, the capital lease liabilityshould bea. $102,500b. $111,500c. $112,500d. $290,000
- On December 31, 2021, a company signed a seven-year finance lease for airplane. The airplane’s fair value wasP8,415,000. The entity made the first annual lease payments of P1,530,000 on the same date. The entity’sincremental borrowing rate was 12% and the interest rate implicit in the lease, which was known by the companywas 9%. The rounded present value factors for an annuity due are 5.1 and 5.5, respectively.Required:a. Lease liability to be reported on December 31, 2021b. Interest expense to be reported in 2022.On June 30, 2016, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2016. Georgia-Atlantic’s incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The fair value of the warehouse is $3 million. Required: 1. Determine the present value of the lease payments at June 30, 2016 (to the nearest $000) that Georgia-Atlantic uses to record the leased asset and lease liability. 2. What amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2016 (ignore taxes)? 3. What amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2016 (ignore taxes)?On 1 January 2014, Lystra entered into a lease agreement with Trina to rent an asset for a 6 year period, at which point, it will be returned to the lessor and scrapped. The annual payments of $18,420, made in advance. The initial measurement of the lease liability amounts to $84,000, discounted at the implicit interest rate shown in the lease agreement of 12.5%. Lystra has the right to determine the use of the asset during the lease term and will obtain substantially all the economic benefit from its use. Required 1 .Explain how the above lease would be accounted for the year ending 31 December 2014 in both the books of the lessee and lessor including producing relevant extracts from the statement of profit or loss and statement of financial position and the relevant portion of the amortisation schedule 1a State the criteria for a contract to be classified as a lease 2. What is the lessee required to recognize in the financial statement at the inception of a lease? Right of…
- On 1 January 2014, Lystra entered into a lease agreement with Trina to rent an asset for a 6 year period, at which point, it will be returned to the lessor and scrapped. The annual payments of $18,420, made in advance. The initial measurement of the lease liability amounts to $84,000, discounted at the implicit interest rate shown in the lease agreement of 12.5%. Lystra has the right to determine the use of the asset during the lease term and will obtain substantially all the economic benefit from its use. Required 1. According to IFRS 16, How should the right of use and lease liability be measured initially? And what discount rate should be used for the present value of the minimum lease payments? 2. How should the right of use of a leased asset be depreciated – lower of the lease term and the economic life of the asset?On January 1, 2015, Traylor Company, an 80%-owned subsidiary of Parker Electronics, Inc., signed a 4-year directfinancing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1 of each year, and title transfers to Traylor on January 1, 2019. The equipment originally cost $40,822 and had an estimated remaining life of five years at the start of the lease term. The lessor’s implicit interest rate is 12%. The lessee also used the 12% rate to record the transaction. Question: Prepare the eliminations and adjustments required for this lease on the December 31, 2015, consolidated worksheet.On January 1, 2015, Traylor Company, an 80%-owned subsidiary of Parker Electronics, Inc., signed a 4-year directfinancing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1 of each year, and title transfers to Traylor on January 1, 2019. The equipment originally cost $40,822 and had an estimated remaining life of five years at the start of the lease term. The lessor’s implicit interest rate is 12%. The lessee also used the 12% rate to record the transaction. 1. Prepare a lease payment amortization schedule for the life of the lease. 2. Prepare the eliminations and adjustments required for this lease on the December 31, 2015, consolidated worksheet. 3. Prepare the eliminations and adjustments for the December 31, 2016, consolidated worksheet.