Wiwil Co. from Malaybalay City leased an equipment of January 3, 2017 from the lessor Gui-yang Corp. The lease contract provides the following: Annual fixed payments in advanced at January 3 of each lease year 2,000,000 Initial direct cost paid on January 3, 2017 500,000 Lease incentive received 300,000 Residual value guaranteed 600,000 Executory cost 50,000 Contractual lease term 5 years Useful life of equipment 6 years The implicit rate of the lease was at 8% (Please only answer the highlighted question) a. Compute for the cost of the right of use asset recognized by Wiwil at the start of the lease. b. What is the interest expense for 2017? c. What is the depreciation expense for 2017?
Wiwil Co. from Malaybalay City leased an equipment of January 3, 2017 from the lessor Gui-yang Corp. The lease contract provides the following: Annual fixed payments in advanced at January 3 of each lease year 2,000,000 Initial direct cost paid on January 3, 2017 500,000 Lease incentive received 300,000 Residual value guaranteed 600,000 Executory cost 50,000 Contractual lease term 5 years Useful life of equipment 6 years The implicit rate of the lease was at 8% (Please only answer the highlighted question) a. Compute for the cost of the right of use asset recognized by Wiwil at the start of the lease. b. What is the interest expense for 2017? c. What is the depreciation expense for 2017?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.7E
Related questions
Question
Wiwil Co. from Malaybalay City leased an equipment of January 3,
2017 from the lessor Gui-yang Corp. The lease contract provides
the following:
Annual fixed payments in advanced at
January 3 of each lease year 2,000,000
Initial direct cost paid on January 3, 2017 500,000
Lease incentive received 300,000
Residual value guaranteed 600,000
Executory cost 50,000
Contractual lease term 5 years
Useful life of equipment 6 years
The implicit rate of the lease was at 8%
(Please only answer the highlighted question)
a. Compute for the cost of the right of use asset recognized by
Wiwil at the start of the lease.
b. What is the interest expense for 2017?
c. What is the
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning