PROBLEM NO. 3– Lessor and Lessee (Lessor, Direct Financing Lease) Assimilator Corp. is in the business of leasing equipment. Assimilator purchased new equipment on Dec. 31, 2022. The equipment was delivered the same day (by prior arrangement) to Tantalum Corp., a lessee. The following information relating to the lease is available: Cost of equipment to Assimilator P550,000 Estimated useful life and lease term 8 years Expected residual value (unguaranteed) P40,000 Interest rat
PROBLEM NO. 3– Lessor and Lessee (Lessor, Direct Financing Lease)
Assimilator Corp. is in the business of leasing equipment. Assimilator purchased new equipment on Dec. 31, 2022. The equipment was delivered the same day (by prior arrangement) to Tantalum Corp., a lessee. The following information relating to the lease is available:
Cost of equipment to Assimilator P550,000
Estimated useful life and lease term 8 years
Expected residual value (unguaranteed) P40,000
Interest rate implicit in the lease 12%
Tantalum’s incremental borrowing rate 14%
Date of first lease payment Dec. 31, 2022
Annual lease payments P95,950
Additional information is as follows:
(a) At the end of the lease, the equipment will revert to Assimilator.
(b) Tantalum is aware of the rate implicit in the lease.
(c) The lease rental consists of equal annual payments.
(Round off present value factors to four decimal places.)
REQUIRED:
4. Lease Liability of Tantalum Corp at December 31, 2023
5. Total expenses of Tantalum Corp in 2023
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