Reference no: EM133114824
Question - Assume that PMB Leasing Corp. and Nayda Inc. sign a lease contract effective on January 1, 2019, where PMB Leasing Corp. leases to Nayda Inc. a bulldozer. The terms and provisions of the lease contract and other pertinent dates are as follows:
The term of the lease is five years. The lease agreement is non-cancelable, requiring equal rental payments of P20,711.11 at the beginning of each year (annuity-due basis).
The bulldozer has a fair value at the commencement of the lease of P100,000, an estimated economic life of five years, and a guaranteed residual value of P5,000. (Nayda Inc. expects that it is probable that the expected value of the residual value at the end of the lease will be greater than the guaranteed amount of P5,000.)
The lease contains no renewal options. The bulldozer reverts to PMB Leasing at the termination of the lease.
Nayda's incremental borrowing rate is 5 percent per year.
Nayda Inc. depreciates its equipment on a straight-line basis.
PMB Leasing sets the annual rental rate to earn a rate of return of 4 percent per year; Nayda is aware of this rate.
Required - Journal Entries for the Lessee for 2019, 2020, and 2024. And show the solutions of arrived amounts in good form.
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