Determine non-current portion of the lease liability

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Reference no: EM132611022

TAUNT TO JEER AT Co. leased a new machine from RIDICULE TO MOCK, Inc. on January 1, 20x1, under a lease with the following information:

Lease Term 10 years

Annual rent payable at the end of each year P80,000

Useful life of machine 12 years

Implicit Interest rate 14%

Lessee's incremental borrowing rate 12%

The annual rental payment includes P6,000 to cover maintenance costs. The maintenance costs transfer to TAUNT. The amount charged reflects the stand alone selling prices of the maintenance services.

Requirements:

Question 1: Provide the entries for 20x1 and 20x2

Question 2: Determine the current and non-current portion of the lease liability on December 31, 20x1.

Reference no: EM132611022

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