Reference no: EM132544457
Question - At the beginning of the current year, CC leased an equipment from a lessor with the following pertinent information.
Annual rental payable at the end of each year 500,000
Lease term 8 years
Useful life of equipment 10 years
Implicit Interest Rate 10%
PV of an ordinary annuity of 1 for 8 periods at 10% 5.33
Present Value of 1 for 8 periods at 10% 0.47
The entity has the option to purchase the equipment on the expiration of the lease term by paying P500,000.
There is reasonable certainty that the entity shall exercise the option. The entity incurred initial direct cost of P200,000.
Required -
1. What is the initial cost of the right of use asset?
2. What is the interest expense for current year?
3. What is the lease liability at year-end?
4. What is the depreciation for current year?
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