Leases 7 - FINANCIAL ACCOUNTING AND REPORTING PDF

Title	Leases 7 - FINANCIAL ACCOUNTING AND REPORTING
Course	Financial Accounting 1
Institution	University of Cebu
Pages	1
File Size	29.2 KB
File Type	PDF
Total Downloads	102
Total Views	151

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FINANCIAL ACCOUNTING AND REPORTING...

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1. Oak Co. leased equipment for its entire nine-year useful life, agreeing to pay ₱50,000 at the start of the lease term on December 31, 20x8, and ₱50,000 annually on each December 31 for the next eight years. The present value on December 31, 20x8, of the nine lease payments over the lease term, using the rate implicit in the lease which Oak knows to be 10%, was ₱316,500. The December 31, 20x8, present value of the lease payments using Oak's incremental borrowing rate of 12% was ₱298,500. Oak made a timely second lease payment. What amount should Oak report as lease liability in its December 31, 20x9, balance sheet? a. 350,000 b. 243,150 c. 228,320 d. 0 Solution: Year 1 2 3

Payment Interest Principal PV 50,000 316,500 50,000 26,650 23,350 266,500 243,15 0...