lease and an estimated useful life of 12 years. The present value of the minimum lease payment is P480,000. A bargain option clause is provided. How much should Malu record as an asset called Right of Use Asset under present GAAP, and a corresponding liability at the beginning of the lease?
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help me to answer the question with supporting computation. thank you
1. How much should malu record as an asset called right of use asset under present gaap, and a corresponding liability at the beginning of the lease?
2. Assume this time it is an operating lease insted of a capital/finance lease, how much right of use asset should malu record at the beginning of the lease?
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- MISTLETOE Company is a dealer in equipment. The entity leased equipment to a lessee on January 1, 2021 for an eight-year period expiring January 1, 2029. Equal annual payments under the lease are due at the end of each year beginning December 31, 2021. The lease agreement included a guaranteed residual value of P200,000 and an implicit rate of 10%. It was determined that the fair value of the asset is P3,000,000. The carrying amount is P2,500,000 and that the present value of the minimum lease payment at 10% is P2,760,900. The PV of 1 at 10% for 8 periods is 0.467, and the PV of an ordinary annuity of 1 at 10% for 8 periods is 5.335. HOW MUCH IS THE GROSS INVESTMENT THAT SHOULD BE INITIALLY RECOGNIZED AS LEASE RECEIVABLE? A. 4,000,000 B. 3,840,150 C. 3,000,000 D. 4,140,056Sassy Company enters into a five-year lease agreement with Corral Company (lessor) over equipment on December 31, 2014. The provisions in the lease are as follows: Island Company will pay P250,000 per year; has the option to purchase the equipment at the end of the five-year period for P100,000 and if the company does not purchase the equipment, it must return to the lessor. Base on the fair value of the asset of P800,000, the periodic rentals of P250,000, and the unguaranteed residual value of P100,000 and based on these variables, the implicit rate of the lease is 19.34%. What should be the carrying value of the lease liability on December 31, 2017?385 022532 122655 364758 6438. Michael Company leased equipment to Hay Corporation on July 1, 2012 for an eight-year period expiring June 30, 2020. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 2012. The cash selling price of the equipment is P3,520,000 which reflects its present value, and the cost of the equipment on Michael's accounting records is P2,800,000. The lease is appropriately recorded as a dealer's lease. What is the amount of the resulting gross profit from this sale at the inception of the lease? a. P45,000 b. P90,000 c. P720,000 d. P1,280,000 Use the same information given in MC No. 8. What other revenue should Michael report in his income statement for year ended December 31, 2012? * a. P292,000 b. P146,000 c. P176,000 d. P352,000 e. P0
- MISTLETOE Company is a dealer in equipment. The entity leased equipment to a lessee on January 1, 2021 for an eight-year period expiring January 1, 2029. Equal annual payments under the lease are due at the end of each year beginning December 31, 2021. The lease agreement included a guaranteed residual value of P200,000 and an implicit rate of 10%. It was determined that the fair value of the asset is P3,000,000. The carrying amount is P2,500,000 and that the present value of the minimum lease payment at 10% is P2,760,900. The PV of 1 at 10% for 8 periods is 0.467, and the PV of an ordinary annuity of 1 at 10% for 8 periods is 5.335. Required: What is the total financial or interest revenue over the lease term?* ₱ 1,558,538 ₱ 1,379,156 ₱ 1,439,100 ₱ 1,498,594 How much is the gross investment that should be initially recognized as lease receivable? * ₱ 4,140,056 ₱ 4,000,000 ₱ 3,840,150 ₱ 3,000,0008. Michael Company leased equipment to Hay Corporation on July 1, 2012 for an eight- year period expiring June 30, 2020. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 2012. The cash selling price of the equipment is P3,520,000 which reflects its present value, and the cost of the equipment on Michael's accounting records is P2,800,000. The lease is appropriately recorded as a dealer's lease. What is the amount of the resulting gross profit from this sale at the inception of the lease? * a. P45,000 O b. P90,000 O c. P720,000 d. P1,280,000Christina Co. has a factory equipment with a carrying amount of P700,000 and has a remaining useful life of 7 years. On January 1, 2020, Christina agreed to an exchange transaction with Kat & Inc. to transfer the equipment to the latter. The transfer satisfied the requirements of PFRS 15 to be a sale and Christina immediately leased it back for a lease term equal to the remaining life of the equipment. The sales price amounted to P500,000 while annual rental payable at the end of each year is P100,000 for an implicit rate of 10%. Selling price is equal to fair value. How much loss shall Christina recognize in relation to the sale and leaseback transaction? a. 681,578.63 b. 200,000 c. 194,736.75 d. 5,263.25
- On January 1, 2023, Pharoah Corp., which uses IFRS, signs a 10-year, non-cancellable lease agreement to lease a specialty lathe from Liu Inc. The following information concerns the lease agreement. 1. The agreement requires equal rental payments of $69,360 beginning on January 1, 2023. 2. 3. The lathe's fair value on January 1, 2023, is $470,000. The lathe has an estimated economic life of 12 years, with an unguaranteed residual value of $15,000. Pharoah depreciates similar equipment using the straight-line method. 4. The lease is non-renewable. At the termination of the lease, the lathe reverts to the lessor. 5. Pharoah's incremental borrowing rate is 9% per year. The lessor's implicit rate is not known by Pharoah. 6. The yearly rental payment includes $2,171.52 of executory costs related to insurance on the lathe. Assume this is a manufacturer/dealer lease. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. (a)…On January 1, 2021, Shadow Industries (lessor) leased equipment to Bone Co. (lessee) for a 5-year period under non-cancelable agreement, after which the leased asset will revert back to Shadow Industries. The equipment costs Shadow $660,000 and normally sells for $744,388. Equal payments under the lease are $160,000 and are due on December 31 of each year, with the first payment made on January 1, 2021. The equipment has a useful life of 6 years. The equipment’s residual value is $80,000 at the end of the lease term. The rate implicit in the lease used by the Shadow is 8%, Bone’s incremental borrowing rate is 10% and lessee is aware of lessor’s rate. What amount would Bone record for the right-of-use asset at inception of the agreement? A. $689,941. B. $716,838. C. $744,388. D. $800,000ABC Machineries, dealer of machinery and equipment, leased equipment to XYZ on July 01, 2021. The lease is appropriately accounted for as a sale by ABC Machineries and a purchase by XYZ. The lease is for a 10-year period (the useful life) of the asset expiring on June 30, 2031. The first of ten equal annual payments of P250,000 was made on July 01, 2021. ABC Machineries purchased the equipment for P1,337,500 on January 01, 2021 and established a list selling price of P1,687,500 on the equipment. Assume that the present value at July 01, 2021 of rent payments over the lease term discounted at 12% was P1,582,500. What is the amount of net investment in the lease and the total income that ABC Machineries should recognize for the year ended December 31, 2021? A. P1,332,500 and P324,950 B. P1,412,450 and P324,950 C. P1,412,450 and P339,950 D. P1,332,500 and P339,950
- ABC Machineries, dealer of machinery and equipment, leased equipment to XYZ on July 01, 2021. The lease is appropriately accounted for as a sale by ABC Machineries and a purchase by XYZ. The lease is for a 10-year period (the useful life) of the asset expiring on June 30, 2031. The first of ten equal annual payments of P250,000 was made on July 01, 2021. ABC Machineries purchased the equipment for P1,337,500 on January 01, 2021 and established a list selling price of P1,687,500 on the equipment. Assume that the present value at July 01, 2021 of rent payments over the lease term discounted at 12% was P1,582,500. What is the amount of net investment in the lease and the total income that ABC Machineries should recognize for the year ended December 31, 2021? * 6On January 1, 2020 ABC Company sold a machinery to XYZ Company for P1,900,000. Because of the entity's commitments to its customers to provide their needs for the next four years, ABC simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under PFRS 15. Information relating to this transaction follows: Fair value of the machinery Carrying amount of machinery Remaining useful life of machinery Lease term 2,200,000 1,700,000 8 years 5 years 500,000 10% Annual rent payable at the end of each year Market rate of interest Present value of 1 at 10% for four periods Present value of an ordinary annuity of 1 for four periods 0.6830 3.1699 Required: Gain on sale and leasebackPatbingsu Machineries, dealer of machinery and equipment, leased equipment to Africa Products on July 1, 2019. The lease is appropriately accounted for as a sale by Patbingsu and as a purchase by Africa. The lease is for 10-year period (the useful life of the asset) expiring on July 1, 2029. The first ten equal annual payments of P250,000 was made on July 1, 2019. Patbingsu purchased the equipment for P1,337,500 on January 1, 2019 and established a list selling price of P1,687,500 on the equipment. Assume that the present value at July 1, 2019 of the payments over the lease term discounted at 12% was P1,582,500. What amount of interest income that Patbingsu should record for the year ended December 31, 2019?