On January 1, 2019, Shak, Inc. signed a noncancelable lease for a sneaker shining machine. The machine has an estimated useful life of nine years. The term of the lease is a six-year term with title passing to Shak at the end of the lease. The agreement called for annual payments of P40,000 starting at the end of the first year. Assume aggregate lease payments were determined to have a present value of P200,000, based on implicit interest of 12 percent. What amount of interest expense should Shak report in its 2019 income statement from this lease transaction?
On January 1, 2019, Shak, Inc. signed a noncancelable lease for a sneaker shining machine. The machine has an estimated useful life of nine years. The term of the lease is a six-year term with title passing to Shak at the end of the lease. The agreement called for annual payments of P40,000 starting at the end of the first year. Assume aggregate lease payments were determined to have a present value of P200,000, based on implicit interest of 12 percent. What amount of interest expense should Shak report in its 2019 income statement from this lease transaction?
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 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...
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On January 1, 2019, Shak, Inc. signed a noncancelable lease for a sneaker shining machine. The machine has an estimated useful life of nine years. The term of the lease is a six-year term with title passing to Shak at the end of the lease. The agreement called for annual payments of P40,000 starting at the end of the first year. Assume aggregate lease payments were determined to have a present value of P200,000, based on implicit interest of 12 percent. What amount of interest expense should Shak report in its 2019 income statement from this lease transaction?
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