On January 1, 2018, Haley Corporation sold a Machine to Quick Finance for P140,000 and immediately leased it back. The machine was carried on Haley’s books at P112,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Haley at lease-end. The lease requires three equal rental payments of P34,784 at the end of each year (first payment on January 1, 2019). The appropriate rate of interest is 6%, the machine has a useful life of 5 years, and the residual value at the end of the lease term is expected to be P56,000, none of which is guaranteed. What is the balance of lease liability (net amount) as of December 31, 2018?
On January 1, 2018, Haley Corporation sold a Machine to Quick Finance for P140,000 and immediately leased it back. The machine was carried on Haley’s books at P112,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Haley at lease-end. The lease requires three equal rental payments of P34,784 at the end of each year (first payment on January 1, 2019). The appropriate rate of interest is 6%, the machine has a useful life of 5 years, and the residual value at the end of the lease term is expected to be P56,000, none of which is guaranteed. What is the balance of lease liability (net amount) as of December 31, 2018?
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...
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On January 1, 2018, Haley Corporation sold a Machine to Quick Finance for P140,000 and immediately leased it back. The machine was carried on Haley’s books at P112,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Haley at lease-end. The lease requires three equal rental payments of P34,784 at the end of each year (first payment on January 1, 2019). The appropriate rate of interest is 6%, the machine has a useful life of 5 years, and the residual value at the end of the lease term is expected to be P56,000, none of which is guaranteed.
What is the balance of lease liability (net amount) as of December 31, 2018?
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