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Provide the journal entries dates january

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Reference no: EM132611851

On January 1, 20x1, lessee enters into a 4_year lease term of a heavy machinery. Annual rental is P200,000 payable at the beginning of each year. Lessee does not know the lessor's implicit interest rate. Lessee's incremental borrowing rate is 14%. Lessee incurs initial direct costs of P50,000 in negotiating the lease. The underlying asset's remaining useful life is 10 years. Lessee uses the straight line method of depreciation.

Requirements:

Question 1: Prepare the amortization table for the lease liability.

Question 2: Provide the journal entries following dates:

  1. January 1, 20x1
  2. December 31, 20x1
  3. January 1, 20x2

Question 3: Compute for the carrying amounts of the right-of-use asset and lease liability on December 31, 20x1.

Reference no: EM132611851

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