Solution-Determine the current and non-current portions of

Determine the current and non-current portions of the lease

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Reference no: EM132745444

ABC Co. leased a new machine from XXX 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 = P 80,000

Useful life of the machine = 12 years

Implicit interest rate = 14%

Lessee's incremental borrowing rate = 12%

The annual rental payment includes P 6,000 to cover maintenance costs. The maintenance costs transfer services to ABC. The amount charged reflects the stand alone selling price of the maintenance services.

Requirements:

Question a. Provide the entries in 20X1 and 20X2.

Question b. Determine the current and non-current portions of the lease liability on December 31, 20X1.

Reference no: EM132745444

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