Record the transactions on both the books of abc co

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Reference no: EM132780550

On January 1, 2016, ABC Co. enters into a 4-year lease of office equipment with XYZ Corp. The rent in 2016 is P10,000 and shall increase by 10% annually starting on January 1, 2017. Rentals are payable at the end of each year. ABC Co. pays XYZ Corp a lease bonus of P5,000 on January 1, 2016. ABC Co. opts to use the practical expedient allowed under PFRS 16 for leases of low value assets, while XYZ Corp properly classifies the lease as operating lease.

REQUIRED:

Problem 1: Provide all the necessary journal entries to record the transactions on both the books of ABC Co. and XYZ Co. for the entire lease term. Provide computations for your answers. Explanations are not necessary.

Reference no: EM132780550

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