At the beginning of current year, World Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction: Sale price at fair value: 5,000,000 Carrying amount of machine: 6,000,000 Annual rental payable at the end of each year: 500,000 Lease term: 5 years Remaining life of machine: 20 years Implicit interest rate: 6% Present value of an ordinary annuity of 1 at 6% for 5 periods: 4.21 What is cost of right of use asset?
At the beginning of current year, World Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction: Sale price at fair value: 5,000,000 Carrying amount of machine: 6,000,000 Annual rental payable at the end of each year: 500,000 Lease term: 5 years Remaining life of machine: 20 years Implicit interest rate: 6% Present value of an ordinary annuity of 1 at 6% for 5 periods: 4.21 What is cost of right of use asset?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of current year, World Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction:
Sale price at fair value: 5,000,000
Carrying amount of machine: 6,000,000
Annual rental payable at the end of each year: 500,000
Lease term: 5 years
Remaining life of machine: 20 years
Implicit interest rate: 6%
Present value of an ordinary annuity of 1 at 6% for 5 periods: 4.21
What is cost of right of use asset?
2,895,000
2,105,000
2,526,000
1,500,000
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