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What is the book value of the right-of-use asset

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Q1) On January 2, 2020, Leo Company leased a piece of music equipment from Min company. The 5-year lease calls for a 10% down payment and equal annual payments at the end of each year. The equipment has an expected useful life of 5 years. Leo's incremental borrowing rate is 10%, and it depreciates similar equipment using the double-declining balance method. The selling price of the equipment is P325,000, and the rate implicit in the lease is 8%, which is known to Leo. (Use five decimal places for PV factors).

What is the book value of the Right-of-use asset and what is the balance in the Lease Liability account on December 31, 2020, respectively?

A. P260,000; P248,491

B. P325,000; P219,243

C. P208,000; P248,491

D. P195,000; P242,643

Q2) New Castle Company had the following classes of shares outstanding as of December 31, 2020:

Ordinary shares, P20 par value, 20,000 outstanding; Preference shares, 6%, P100 par value, cumulative and fully participating, 1,000 shares were outstanding.

The last payment of preference dividend was on December 31, 2017. On December 31, 2020, a total of cash dividend of P90,000 was declared.

What are the amounts of dividend payable on both the ordinary and preference shares respectively?

A. P57,600 and P32,400

B. P67,200 and P22,000

C. P72,000 and P18,000

D. P62,400 and P27,600

Reference no: EM132934779

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