II On July 1, 2021, Aurora Company leased a equipment from Lucena Company. The lease was...

 

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II On July 1, 2021, Aurora Company leased a equipment from Lucena Company. The lease was noncancellable and was in substance an installment purchase. Two(2) possible options are summarized below: Description Option 1 Option 2 Date of contract July 1, 2021 P200,000 July 1, 2021 P200,000 Total contract price 1st payment (amount & date) Last payment (amount & date) P20,000 (July 1, 2021) P20,000 (July 1, 2030) P20,000 (July 1, 2022) P20,000(July 1, 2031) All payments are of equal amounts. The prevailing interest rate for Aurora on similar financing agreement is 10%. Title will pass to Aurora when the final contract price is paid. The equipment has an estimated useful life of 10 years with no anticipated salvage value. REQUIRED: Compute for the following: 21. Cost of the asset called Right of Use Asset (option 1) 22. Cost of the asset called Right of Use Asset (option 2) 23. Depreciation expense for the 6-month period ended Dec. 31, 2021 under Option 2. 24. Interest expense for the 6-month period ended Dec. 31, 2021 under Option 2. 25. Interest expense for the year ended Dec. 31, 2022 under option 1. Round computations to the nearest peso. Final answers shall be presented in the answer sheet. Erasures and alterations will not be allowed again in the answer sheet. Supporting computations shall be submitted to get credit. II On July 1, 2021, Aurora Company leased a equipment from Lucena Company. The lease was noncancellable and was in substance an installment purchase. Two(2) possible options are summarized below: Description Option 1 Option 2 Date of contract July 1, 2021 P200,000 July 1, 2021 P200,000 Total contract price 1st payment (amount & date) Last payment (amount & date) P20,000 (July 1, 2021) P20,000 (July 1, 2030) P20,000 (July 1, 2022) P20,000(July 1, 2031) All payments are of equal amounts. The prevailing interest rate for Aurora on similar financing agreement is 10%. Title will pass to Aurora when the final contract price is paid. The equipment has an estimated useful life of 10 years with no anticipated salvage value. REQUIRED: Compute for the following: 21. Cost of the asset called Right of Use Asset (option 1) 22. Cost of the asset called Right of Use Asset (option 2) 23. Depreciation expense for the 6-month period ended Dec. 31, 2021 under Option 2. 24. Interest expense for the 6-month period ended Dec. 31, 2021 under Option 2. 25. Interest expense for the year ended Dec. 31, 2022 under option 1. Round computations to the nearest peso. Final answers shall be presented in the answer sheet. Erasures and alterations will not be allowed again in the answer sheet. Supporting computations shall be submitted to get credit.

Answer rating: 100% (QA)

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