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What is initial measurement of the right-of-use equipment

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Question - On July 1, 2021, A Company signed a 5-year lease for an equipment having a 12-year economic life. The lease does not provide for a transfer of title or a bargain purchase option. The lease contract calls for annual payments of P360,000, starting July 1, 2021. The implicit interest rate in the lease is 14% which is known to A Company. Fair value of the equipment at the inception of the lease is P2,220,000. A Company uses the straight-line method of depreciation.

Required -

What is the initial measurement of the right-of-use equipment?

What is the carrying value of the right-of-use equipment on December 31, 2021?

What is the lease liability on December 31, 2022?

Reference no: EM133088660

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