Ali Co. has signed a six-year lease contract to purchase an alligator shear on 1 July 2020, with the present value of $28,000,000 at the purchase date. ACC Co. must pay a 10% finance charge annually and a deposit of $3,000,000. $8,000,000 annual rents will be paid on 30 June for six years. Calculate the amount that should. be recorded as the current liability in the Statement of Financial Position as at 30 June 2021. A. $6,050,000 B. $19,500,000 C.$8,500,000 D. $13,450,000

Ali Co. has signed a six-year lease contract to purchase an alligator shear on 1 July 2020, with the present value of $28,000,000 at the purchase date. ACC Co. must pay a 10% finance charge annually and a deposit of $3,000,000. $8,000,000 annual rents will be paid on 30 June for six years. Calculate the amount that should. be recorded as the current liability in the Statement of Financial Position as at 30 June 2021. A. $6,050,000 B. $19,500,000 C.$8,500,000 D. $13,450,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2020, Bacarra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000. Assume it is a direct finance lease with an implicit rate of 12% and the residual value is guaranteed, how much is the interest income for 2020?
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