1, 2019 is P4,478,000. The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. Implicit rate is 12%.
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On July 1, 2019, the Manaow Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Del Inc. The following information pertains to the lease agreement.
- Annual rental payment is P750,000 beginning July 1, 2019. The rental payment includes P50,000 for taxes and insurance.
- The fair value of the building on July 1, 2019 is P4,478,000.
- The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000.
- Implicit rate is 12%.
Under IFRS 16, how much is the impact of the lease transaction to the income statement of Manaow Corp. dated December 31, 2019?
A.P495,271
B.P470,271
C.P433,357
D. P408,357
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- On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.On April 1, 2022, the Bergify Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Knowie Inc. The following information pertains to the lease agreement: Annual rental payment is P750,000 beginning April 1, 2022. The rental payment includes P50,000 for taxes and insurance. The fair value of the building on April 1, 2022 is P4,478,000. The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. Implicit rate is 12%. (Round off the PV factor to four decimal places, then do not round off during the computation)How much is the impact of the lease transaction to the income statement of Bergify Corp. dated December 31, 2022?On July 1, 2019, the Manaow Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Del Inc. The following information pertains to the lease agreement. ❖ Annual rental payment is P750,000 beginning July 1, 2019. The rental payment includes P50,000 for taxes and insurance. ❖ The fair value of the building on July 1, 2019 is P4,478,000. ❖ The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. ❖ Implicit rate is 12%. Under IFRS 16, how much is the impact of the lease transaction to the income statement of Manaow Corp. dated December 31, 2019? A. P495,271 B. P470,271 C. P433,357 D. P408,357
- On July 1,2020, the Prince of Wales, Inc. signs a 10-year non-cancellable lease agreement for a storage buildingowned by Colony, Inc.The following information pertains to the lease agreement.• Annual rental payment is P 750,000 beginning on July 1,2020. This rental payment includes P 50,000 for taxes andinsurance.• The fair value of the building on July 1,2020 is P 4,478,000.• The building has an estimated useful life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000.• Interest rate implicit on the lease is 10%.REQUIRED:a.) At what amount should Prince of Wales record the building on July 1,2020?b.) What is the annual depreciation on the building?d.) Prepare the entries in the books of Prince of Wales to record the foregoing for the years 2020 and 2021. The company adopts the calendar year as its reporting period.Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $66,299 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $486,019. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $12,000, and an expected residual value of $9,800. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Partially…On July 1.2020, the Prince of Wales, Inc. signs a 10-year non-cancellable lease agreement for a storage building owned by Colony, Inc. The following information pertains to the lease agreement. · Annual rental payment is P 750,000 beginning on July 1,2020. This rental payment includes P 50,000 for taxes and insurance. • The fair value of the building on July 1,2020 is P 4,478,000. • The building has an estimated useful life of 12 years. Unguaranteed residual value at the end of 10 years is P 150,000. • Interest rate implicit on the lease is 10%. REQUIRED: a.) At what amount should Prince of Wales record the building on July 1,2020? b.) What is the annual depreciation on the building? d.) Prepare the entries in the books of Prince of Wales to record the foregoing for the years 2020 and 2021.The company adopts the calendar year as its reporting period.
- Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $67,599 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $494,051. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $9,000, and an expected residual value of $5,500. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this…Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $ 67,299 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $ 492,571. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $ 10,500, and an expected residual value of $ 7,300. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark.Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of S66,499 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $486,311. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $9.500, and an expected residual value of $7.100. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark. 5. Click here to viewfactor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare the journal entries on the lessee's books to…
- Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement 1. The agreement requires equal rental payments of $67,099 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $491,817. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $12,000, and an expected residual value of $9,000. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this…Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $66,799 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $488,254. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $9,000, and an expected residual value of $6,300. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease…Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $66,599 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $487,267. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $10,000, and an expected residual value of $7,500. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this…