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- Please answer in good accounting form. Thanks! On January 1, 2020, EEE Corp. leased a warehouse for 5 years at an annual rental of ₱575,000 payable every December 31. The equipment had an estimated life of 8 years and shall revert back to the lessor at the expiration of the lease term. The lessee paid the lessor a lease bonus of ₱250,000 and was also responsible as per the lease agreement to pay the broker fees and commission amounting to ₱180,000. As an incentive however, the lessor shall reimburse EEE Corp. 75% of the said initial direct cost. The implicit lease rate known to both parties was at 12% while EEE Corporation’s incremental borrowing rate was at 10%.Requirements: (Use a PV FACTOR rounded off to 4 decimal places) 8. Depreciation expense on the Right of Use Asset in 2020 (under Straight Line Method)9. Carrying value of the Right of Use Asset as of December 31, 2021NCH Bhd signed a lease agreement to lease one piece of computer equipment with KHL Bhd on 1 January 2022 with a lease rental of RM150,000 each per annum at the end of each financial year for 5 years. NCH Bhd also needs to pay an installation fee amounting to RM5,000. The lease agreement specifies that NCH Bhd has full control over the use of the computer equipment throughout the arrangement period. The estimated useful life of the computer equipment is five years and the guaranteed residual value at the end of the lease period is RM20,000. The lease rental was calculated and mutually agreed upon with a 10% rate of return. It is the policy of the company to adopt a cost model to initially and subsequently measure its property, plant and equipment, and the straight-line method is adopted to depreciate the property, plant and equipment. Required: a. b. Year (n) Discount factor at 10% [Single] (i) Discount factor at 10% [Annuity] (i) C. 1 0.9091 0.9091 2 3 4 5 0.8264 0.6830 0.6209 0.7513…Ken Company leased an asset on January 1, 2020. The asset was accounted for as an operating lease for five years. The rent for the first year is P100,000 and the contract stipulates that the rent shall increase by 10% for every year thereafter. The lease agreement also provides that a lease bonus shall be paid to Ken at the start of the lease. Ken reported an Unearned Rent Revenue of P10,796 and Rent Receivable of P5,306 on its Balance Sheet for 2021 and 2022, respectively. How much is the lease bonus? How much is the rental expense to be recorded in 2022? How much should be reported in the 2022 Balance Sheet? [Indicate whether it is an asset or liability]
- On January 1, 2022, ABC Company signed a 5-year non-cancelable lease for a building. This is also the period when the contract is enforceable.The terms of the lease called the ABC to make annual payments of P500,000 at the beginning of each year starting January 1, 2022. The contract provides that ABC will obtain the ownership at the end of the lease term. The building has an estimated useful life of 6 years and a P120,000 guaranteed residual value at the end of the five-year lease term. ABC has a constructive obligation to restore the machine to a condition still suitable for use at the end of the lease term. Estimated cost of restoration is P200,000. ABC incurred directly attributable cost of P90,000 to install the machine. The rate implicit in this contract is not readily determinable at the time of inception of the contract and incremental borrowing rate is at 9%. How much interest expense should be recognized in the year 2023?On January 1, 2022, ABC Company signed a 5-year non-cancelable lease for a building. This is also the period when the contract is enforceable.The terms of the lease called the ABC to make annual payments of P500,000 at the beginning of each year starting January 1, 2022. The contract provides that ABC will obtain the ownership at the end of the lease term. The building has an estimated useful life of 6 years and a P120,000 guaranteed residual value at the end of the five-year lease term. ABC has a constructive obligation to restore the machine to a condition still suitable for use at the end of the lease term. Estimated cost of restoration is P200,000. ABC incurred directly attributable cost of P90,000 to install the machine. The rate implicit in this contract is not readily determinable at the time of inception of the contract and incremental borrowing rate is at 9%. How much depreciation expense will be taken up by ABC?On 1 March 2020,the company entered into a lease agreement in order to lease a manufacturing machine with a costprice of R250 000 (VAT inclusive). The period of the lease is five years, and the useful life of the machinery is estimatedat six years. The following is an extract from the lease agreement:4.1.1 Ownership of the machinery will be transferred to the Lessee at the end of the lease.4.1.2 Should the Lessee cancel the lease, the Lessor’s losses will be borne by the Lessee.Monthly instalments are payable in arrears and amount to R5 947 (VAT inclusive). The company used themanufacturing machine for a qualifying purpose. The company is a registered VAT vendor.Required:Provide the deferred tax movement per the balance sheet method for the lease agreement for the financial year ending31 December 2021. Clearly indicate whether the movement represents an income or an expense. Note:- Show all calculations, marks are awarded for calculations.- You may round off to the nearest Rand.
- AB leases 100 desk phones for use in one of its offices. The contract term states that there will be an annual rental payment of R9 000 for eight years. The lease arrangement begins on 1 July 20x0. As an incentive to AB, no payment is required in the first year. The desk phones are to be classified as low-value items.Prepare the correct debit or credit entry that would be required in Entity AB’s income statement for the year ended 30 June 20x1 in respect of the above transaction.PRIMAX BHD signed a five-year contract to lease a machinery to LM BHD on 1 January 2020. The contract requires LM BHD. to make an annual payment of RM18,000 on the signing date and subsequently on 31 December every year. LM BHD has guaranteed RM8,000 on the residual value. The machinery was purchased by PRIMAX at RM100,000 on 1 January 2019 with an estimated residual value of RM10,000 and useful life of seven years. PRESENT VALUE TABLE i. Assuming the implicit rate is 8 percent, show the journal entry on 1 January 2020 for PRIMAX BHD. ii. Show all the journal entries on 31 December 2020 related to the lease for PRIMAX BHD.I MISS HIGH SCHOOL INC. leased a machine from ANYARE SA COLLEGE LTD. on January 01, 2019. The first annual payment was made on January 01, 2020. The machine has an economic life of six years. The lease agreement requires four annual payments of P33,000, including P3,000 annual payment for repairs and maintenance. At the end of the lease term, the machine will be returned to ANYARE SA COLLEGE LTD. and I MISS HIGH SCHOOL INC. guarantees a residual value of P5,000. Interest implicit in the lease is 10% which is known to I MISS HIGH SCHOOL INC. For the year ended December 31, 2020, what would I MISS HIGH SCHOOL INC. record in relation to the lease? Round present value factors to five decimal places. a. An interest expense of P9,851. b. An interest expense of P0. c. An interest payable of P9,851. d. An interest payable of P7,836.
- I MISS HIGH SCHOOL INC. leased a machine from ANYARE SA COLLEGE LTD. on January 01, 2019. The first annual payment was made on January 01, 2020. The machine has an economic life of six years. The lease agreement requires four annual payments of P33,000, including P3,000 annual payment for repairs and maintenance. At the end of the lease term, the machine will be returned to ANYARE SA COLLEGE LTD. and I MISS HIGH SCHOOL INC. guarantees a residual value of P5,000. Interest implicit in the lease is 10% which is known to I MISS HIGH SCHOOL INC. For the year ended December 31, 2020, what would I MISS HIGH SCHOOL INC. record in relation to the lease? Round present value factors to five decimal places. Use the same information in MC 30. How much annual depreciation expense should I MISS HIGH SCHOOL INC. record? a. P24,628 b. P16,419 c. P23,378 d. P15,585I MISS HIGH SCHOOL INC. leased a machine from ANYARE SA COLLEGE LTD. on January 01, 2019. The first annual payment was made on January 01, 2020. The machine has an economic life of six years. The lease agreement requires four annual payments of P33,000, including P3,000 annual payment for repairs and maintenance. At the end of the lease term, the machine will be returned to ANYARE SA COLLEGE LTD. A residual value in the amount of P5,000 has been guaranteed by I MISS HIGH SCHOOL INC. Interest implicit in the lease is 10% which is known to I MISS HIGH SCHOOL INC.Round present value factors to five decimal places. How much annual depreciation expense should I MISS HIGH SCHOOL INC. record? a. P24,628 b. P16,419 c. P23,378 d. P15,585On 1 January 2020, the company had entered into a five-year lease agreement for an office space with GP S.A.O.G. The company must make lease payments of OMR 50,000 annually at the beginning of each year. The present value of the total lease payments is OMR 208,500. The cost of capital used is 10%. What amount should be recognised in right-to-use-asset as per IFRS 16 in the books of the lessee. O a. OMR 158,500. O b. OMR 208,500. OC. OMR 250,000. O d. OMR 25,000.