On April 1, 2022, the Bergify Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Knowie Inc. The following information pertains to the lease agreement: Annual rental payment is P750,000 beginning April 1, 2022. The rental payment includes P50,000 for taxes and insurance. The fair value of the building on April 1, 2022 is P4,478,000. The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. Implicit rate is 12%. (Round off the PV factor to four decimal places, then do not round off during the computation) How much is the impact of the lease transaction to the income statement of Bergify Corp. dated December 31, 2022?
On April 1, 2022, the Bergify Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Knowie Inc. The following information pertains to the lease agreement: Annual rental payment is P750,000 beginning April 1, 2022. The rental payment includes P50,000 for taxes and insurance. The fair value of the building on April 1, 2022 is P4,478,000. The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. Implicit rate is 12%. (Round off the PV factor to four decimal places, then do not round off during the computation) How much is the impact of the lease transaction to the income statement of Bergify Corp. dated December 31, 2022?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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On April 1, 2022, the Bergify Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Knowie Inc. The following information pertains to the lease agreement:
- Annual rental payment is P750,000 beginning April 1, 2022. The rental payment includes P50,000 for taxes and insurance.
- The fair value of the building on April 1, 2022 is P4,478,000.
- The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000.
- Implicit rate is 12%.
(Round off the PV factor to four decimal places, then do not round off during the computation)
How much is the impact of the lease transaction to the income statement of Bergify Corp. dated December 31, 2022?
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