On January 1, 2021, Nets Company entered into a lease contract with Denver Company for a new equipment that had a selling price of P2,120,000. The lease contract provides that annual lease payments of P420,000 will be made for 6 years. Nets made the first payment on January 1, 2021, subsequent payments are made on December 31 of each year. Nets guarantees a residual value of P367,122 at the end of the lease term. After considering the guaranteed residual value, the rate implicit in the lease is determined to be 12%. Nets has an incremental borrowing rate of 15%. The economic life of the equipment is 9 years. Nets depreciates its equipment using the straight line method. 1. The non-current portion of the lease liability as of December 31, 2022 is: 2. The carrying amount of the equipment as of December 31, 2023 is:
On January 1, 2021, Nets Company entered into a lease contract with Denver Company for a new equipment that had a selling price of P2,120,000. The lease contract provides that annual lease payments of P420,000 will be made for 6 years. Nets made the first payment on January 1, 2021, subsequent payments are made on December 31 of each year. Nets guarantees a residual value of P367,122 at the end of the lease term. After considering the guaranteed residual value, the rate implicit in the lease is determined to be 12%. Nets has an incremental borrowing rate of 15%. The economic life of the equipment is 9 years. Nets depreciates its equipment using the straight line method. 1. The non-current portion of the lease liability as of December 31, 2022 is: 2. The carrying amount of the equipment as of December 31, 2023 is:
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 3E: Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides...
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On January 1, 2021, Nets Company entered into a lease contract with Denver Company for a new equipment that had a selling price of P2,120,000. The lease contract provides that annual lease payments of P420,000 will be made for 6 years. Nets made the first payment on January 1, 2021, subsequent payments are made on December 31 of each year. Nets guarantees a residual value of P367,122 at the end of the lease term. After considering the guaranteed residual value, the rate implicit in the lease is determined to be 12%. Nets has an incremental borrowing rate of 15%. The economic life of the equipment is 9 years. Nets depreciates its equipment using the straight line method .
1. The non-current portion of the lease liability as of December 31, 2022 is:
2. The carrying amount of the equipment as of December 31, 2023 is:
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