for 5 years. Sale price at fair value 20,000,000 Carrying amount of building 24,000,000 Annual rental payable at the end of each year 1,000,000 Implicit interest rate 12% Present value of an ordina
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At the beginning of current year, an entity sold building with remaining useful life of 25 years and immediately leased it back for 5 years.
|
Sale price at fair value |
20,000,000 |
|
Carrying amount of building |
24,000,000 |
|
Annual rental payable at the end of each year |
1,000,000 |
|
Implicit interest rate |
12% |
|
Present value of an ordinary annuity of 1 at 12% for 5 periods |
3.60 |
What is the cost of right of use asset?
What is annual
What is the loss on right transferred?
What amount of net rental income should be reported by the lessor?
Step by step
Solved in 2 steps
- An entity purchased a plant asset under a deferred payment contract. The agreement was to pay 10,000 per year for five years. The plant asset is initially measured at ? Choices: a. 50,000 b. 50,000 plus interest c. Present value of 10,000 annuity for five years at an imputed interest. d. Present value of 50,000 for five years at imputed interest.At the beginning of current year, World Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction:Sale price at fair value: 5,000,000Carrying amount of machine: 6,000,000Annual rental payable at the end of each year: 500,000Lease term: 5 yearsRemaining life of machine: 20 yearsImplicit interest rate: 6%Present value of an ordinary annuity of 1 at 6% for 5 periods: 4.21 What is cost of right of use asset? 2,895,0002,105,0002,526,0001,500,000At the start of the current year, Grace Company sold a building andimmediately leased it back, The following data pertain to the sale andleaseback transaction: Sale price at above fair value P9M; FV of the buildingis P8M, with carrying amount of P7,200,000 and annual rental payable atthe end of each year at P600,000. The remaining life of the building is 20years and the lease term is 4 years. The implicit interest rate is 12%. PV of anordinary annuity of 1 at 12% for 4 years is 3.037. 1. What is the initial lease liability? 2. What is the cost of the right of use asset? 3. What is the gain on right transferred to buyer-lessor? and what is the annual rental income of buyer-lessor?
- At the beginning of current year, Denver Company sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental.Sale price at fair value: 6,000,000Carrying amount of equipment: 4,500,000Annual rental payable at the end of each year: 800,000Implicit interest rate: 10%Present value of an ordinary annuity of 1 at 10% for four periods: 3.17 What amount should be reported as gain on right transferred to the buyer-lessor? 866,0000750,000634,000 What amount should be reported as annual depreciation of the right of u 634,000475,500190,200253,6003. On January 1, 2019, an entity sold a building with remaining life of 20 years, and immediately leases it back for 5 years. The following information is available: Sale price - 20,000,000 Fair value of building - 18,000,000 Carrying amount of building - 10,000,000 Annual rental payable at the end of each year - 1,500,000 Implicit interest rate - 6% Determine the following at the commencement at seller-lessee’s perspective (use 3-decimal PVF). How much is the gain or loss on right transferred? (Round off final answer to whole number)At the beginning of current year, Denver Company sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental.Sale price at fair value: 6,000,000Carrying amount of equipment: 4,500,000Annual rental payable at the end of each year: 800,000Implicit interest rate: 10%Present value of an ordinary annuity of 1 at 10% for four periods: 3.17 What is the net annual rental income of the buyer-lessor? 600,000400,000800,000200,000
- At the beginning of current year, Denver Company sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental.Sale price at fair value: 6,000,000Carrying amount of equipment: 4,500,000Annual rental payable at the end of each year: 800,000Implicit interest rate: 10%Present value of an ordinary annuity of 1 at 10% for four periods: 3.17 What amount should be reported as initial lease liability? 3,000,0002,536,00003,200,000 What is the cost of right of use asset? 2,598,00001,902,0002,536,000At the beginning of current year, Waxxy Company sold a machine and immediately leased back. The following data relate to the sale and leaseback transaction: Sale price at above fair value 6,000,000 Fair value of machine 5,000,000 Carrying amount of machine 4,500,000 Annual rental payable at the end of each year 800,000 Remaining life of machine 10 years Lease term 4 years Implicit interest rate 8% Present value of an ordinary annuity of 1 at 8% for four periods 3.312 There is no transfer of title to the lessee nor…Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount should be reported as sales revenue? 7,770,00010,000,0007,200,0007,000,000 What is the interest income for 2023? 932,400864,000840,000880,000
- Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount of cost of goods sold should be reported? 5,430,0006,000,0007,000,0007,200,000building with remaining useful life of 30 years and At the beginning of current year, Judy Company sold a 5. What is the net annual rent income of the buyer-lessor? Problem 15-14 (IFRS) immediately leased it back for 5 years. Sale price at below fair value Fair value of building Carrying amount of building Annual rental payable at the end ofeach year Implicit interest rate Present value of an ordinary annuity of 1 at 12% for 5 periods 18,000,000 20,000,000 24,000,000 1,000,000 12% 3.60 1. What is the initial lease liability? a. 3,600,000 b. 4,000,000 c. 4,800,000 d. 2. What the cost of right of use asset? a. 3,000,000 b. 4,320,000 c. 5,760,000 d. 6,720,000 3. What is the loss on right transferred? a. 4,000,000 b. 2,880,000 c. 5,760,000 d. 6,720,000 4. What is the interest expense of the seller-lessee for the current year? a. 120,000 b. 576,000 c. 672,000 d. 432,000 a. 400,000, b. 200,000 c. 300,000 d. 100,000 19 I 19 + РageWITH SOLUTION/COMPUTATION 61. At the beginning of current year. An entity leased office space for five years at an annual rental of P700,000 under an operating lease. On the same date, the entity incurred the following amounts: Bonus to obtain lease 300,000 First year’s rent 700,000 Last year’s rent 700,000 Security deposit refundable at lease expiration 800,000 Installation of new walls and offices 750,000 Insurance 50,000 Property taxes 40,000 Initial direct cost 100,000 What total amount of the expenses relating to the rent of office space should be reported for the current year?a. 1,100,000b. 1,000,000c. 1,800,000d. 1,340,000
