On Jan 1, 2020, Soul Company leased machinery from Sister Company for a 10-year period. The useful life of the asset is 20 years. Equal annual payments under the lease are Php200,000 and are due on January 1 of each year starting Jan 1, 2020. The present value on Jan 1, 2020 of the lease payments over the lease term discounted at implicit interest rate of 10% was Php1,352,000. The lease provides for a transfer of title to the lessee upon expiration of the lease term.
On Jan 1, 2020, Soul Company leased machinery from Sister Company for a 10-year period. The useful life of the asset is 20 years. Equal annual payments under the lease are Php200,000 and are due on January 1 of each year starting Jan 1, 2020. The present value on Jan 1, 2020 of the lease payments over the lease term discounted at implicit interest rate of 10% was Php1,352,000. The lease provides for a transfer of title to the lessee upon expiration of the lease term.
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...
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Question
*attached is the problem
REQUIRED: choose the letter
- What is the lease liability on Dec. 31, 2020?
a. 1,352,000
b. 1,152,000
c. 1,067,200
d. 1,552,000
- What is the lease liability to be reported as non-current on Dec 31, 2020?
a. 1,215,920
b. 1,090,240
c. 1,067,200
d. 973,920
Transcribed Image Text:On Jan 1, 2020, Soul Company leased machinery from Sister Company
for a 10-year period. The useful life of the asset is 20 years. Equal annual
payments under the lease are Php200,000 and are due on January 1 of
each year starting Jan 1, 2020.
The present value on Jan 1, 2020 of the lease payments over the lease
term discounted at implicit interest rate of 10% was Php1,352,000.
The lease provides for a transfer of title to the lessee upon expiration
of the lease term.
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