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What is the initial lease liability on January

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Reference no: EM132566222

Question - L Company leased machinery on January 1, 2018 with the following information:

Annual rental payable at the end of each year: P1,000,000

Payment to lessor to obtain long-term lease: 300,000

Cost of dismantling and restoring the asset as required by contract at present value: 330,000

Annual executor cost paid by lessee: 50,000

Lease term: 4 years

Useful life of machinery: 8 years

Implicit interest rate: 10%

Present value of ordinary annuity of 1 at 10% for 4 periods: 3.17

The contract of lease provides for neither a transfer of title nor a purchase option.

Required -

1. What is the initial lease liability on January 1, 2018?

2. What is the cost of right-of-use asset?

Reference no: EM132566222

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