Reference no: EM132769781
Question - At the beginning of year 2020, Romero Company leased an equipment with the following provisions:
Annual lease payments due at the end of each period P200,000
Purchase option that is not reasonably certain to be exercised 60,000
Initial direct cost paid 70,000
Lease incentives received 30,000
Lease bonus paid to lessor before commencement of lease 20,000
Present value of dismantling cost as required by contract discounted at 6%, 40,000
Lease term 5 years
Useful life of building 8 years
Interest rate implicit in the lease 8%
Required -
1. What is the initial lease liability?
2. What is the initial cost of right to usage of equipment?
3. How much is the depreciation for 2020?
4. What is the lease liability on December 31, 2020?
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