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How much is the carrying value of the right of use assets

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Question - Bergify Corp. has entered into a lease arrangement with Foodie Ltd. in which it has agreed to lease an item of machinery from Foodie Ltd. on the following terms:

Date of commencement of lease - July 1, 2022

Duration of lease - 8 years

Implicit rate of interest - 6%

Initial up-front payment - P200,000

Lease payments at the end of each year - P100,000

The lease is considered non-cancellable. The economic life of the machinery is 10 years. However, Bergify Corp. will return the machinery to Foodie Lid. at the end of the lease term. At this stage it is expected that the machinery will have a residual unguaranteed value of P80,000 at the end of the lease term. The company uses straight line method. How much is the carrying value of the right of use assets on July 1, 2022?

Reference no: EM133186030

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