On January 2, 2021, Melody company leased a machine from Andre Company. The the following information relates to the lease: annual rental payable every January 1-------------------P500,000 Unguaranteed residual value ----------------------------- 50,000 Implicit interest rate in lease------------------------------- 12% Melody's incremental borrowing rate--------------------------15% PV of annuity of 1 in advance for 6 periods at 12%- 4.61 PV of annuity of 1 in advance for 6 periods at 15%- 4.35 PV of single payment------------------------at 12% -0.5066 PV of single payment------------------------at 15% -0.4323 Lease term---------6 years ; Estimated useful life of the machine--- 8 years What is the balance of lease liability at December 31, 2022?
On January 2, 2021, Melody company leased a machine from Andre Company.
The the following information relates to the lease:
annual rental payable every January 1-------------------P500,000
Unguaranteed residual value ----------------------------- 50,000
Implicit interest rate in lease------------------------------- 12%
Melody's incremental borrowing rate--------------------------15%
PV of annuity of 1 in advance for 6 periods at 12%- 4.61
PV of annuity of 1 in advance for 6 periods at 15%- 4.35
PV of single payment------------------------at 12% -0.5066
PV of single payment------------------------at 15% -0.4323
Lease term---------6 years ; Estimated useful life of the machine--- 8 years
What is the balance of lease liability at December 31, 2022?
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