On January 1, 2021, Elle Company acquired a machine by signing a five-year lease. Annual rentals of P1,000,000 are payable at the beginning of each lease year starting January 1, 2021. The machine is expected to have an unguaranteed residual value of P600,000 at the end of the lease term. The machine's useful life is 6 years, at the end of which the machine's residual value is expected to be P300,000. Elle uses the straight-line method to depreciate this asset. The lessor's implicit interest rate is 10%, which is known to Elle. Elle appropriately recorded the machine and the related liability on January 1, 2021. Elle Company follows the calendar year as its accounting period. What is the capitalized cost of the Right-of-Use Machine on January 1, 2021, and the depreciation expense for the year ended December 31, 2021? (Use four decimal places) * m O P4,790,800 and P958,160 O P4,169,900 and P833,980 O P4,169,900 and P644,983 O P4 790 900 and P748 467
On January 1, 2021, Elle Company acquired a machine by signing a five-year lease. Annual rentals of P1,000,000 are payable at the beginning of each lease year starting January 1, 2021. The machine is expected to have an unguaranteed residual value of P600,000 at the end of the lease term. The machine's useful life is 6 years, at the end of which the machine's residual value is expected to be P300,000. Elle uses the straight-line method to depreciate this asset. The lessor's implicit interest rate is 10%, which is known to Elle. Elle appropriately recorded the machine and the related liability on January 1, 2021. Elle Company follows the calendar year as its accounting period. What is the capitalized cost of the Right-of-Use Machine on January 1, 2021, and the depreciation expense for the year ended December 31, 2021? (Use four decimal places) * m O P4,790,800 and P958,160 O P4,169,900 and P833,980 O P4,169,900 and P644,983 O P4 790 900 and P748 467
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 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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