Reference no: EM132930655
Questions -
Q1. On January 1, 2021 EDSA company entered into an 8 year lease of a floor of building with useful life of 15 years with the following terms: 1) Annual rental for the first three years payable at the end of each year - 300,000 b) Annual rental for the next five years payable at the end of each year - 400,000 c) Implicit interest rate 10% d) incremental borrowing rate 12% e) PV of an ordinary annuity of 1 at 10% for three periods 2.49 , PV of an ordinary annuity of 1 at 10% for five periods 3.79 , PV of 1 at 10% for three periods .75 f) PV of an ordinary annuity of 1 at 12% for three periods 5.92 , PV of an ordinary annuity of 1 at 12% for five periods 4.725 , PV of 1 at 12% for three periods .711. The lease provides for neither a transfer of title to the lessee nor a purchase option. What is the lease liability on December 31, 2023?
Q2. On January 1, 2021 EDSA company received 1,077,200 for 12% bonds with face amount of 1,000,000. The bonds were sold to yield 10%. Interest is payable semi annually every January 1 and July 1. The entity elected the fair value option for measuring financial liabilities. On December 31, 2021 ,the fair value of the bonds is 1,064,600 . The change in fair value of the bonds is attributable to market factors. What is the carrying amount of the bonds on December 31, 2020
Q3. On January 1, 2019 , EDSA Company leased a building to UMAK company under an operating lease for 5 years 500,000 per year and payable the first day of each lease year. EDSA company paid 150,000 to real estate broker as a finder fee and incurred insurance and property tax expense totaling 90,000 for the current year. The building is depreciated 120,000 per year. Additionally, UMAK Company paid 500,000 to EDSA company as a lease bonus and 250,000 as a security deposit to be refunded upon expiration of the lease. What amount should be reported as net rent income for the current year?
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