On January 1, 2020, ABC Co. leased a machinery to XYZ Co. with the following details:...
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On January 1, 2020, ABC Co. leased a machinery to XYZ Co. with the following details: Cost of machinery to the lessor Residual value guarantee Annual rental payable at the beginning of each year starting January 1, 2020 ? Initial direct cost incurred by the lessee Useful life and lease term Implicit interest rate Present value of an annuity due of 1 for 4 years at 10% Present value of 1 for 4 years at 10% 3,760,100 400,000 250,000 4 years 10% 3.4869 0.6830 At the beginning of 2021, XYZ Co. subleased the equipment to MNO Co. where risk and rewards are substantially transferred to the new lessee, with the following details: Annual rental payable at the end of each year starting December 31, 2021 Initial direct cost incurred by the lessee 1,100,000 250,000 3 years Lease term Implicit interest rate Present value of an ordinary annuity of 1 for 3 years at 10% Present value of 1 for 3 years at 10% 10% 2.50 0.75 Required: Answer the following under the point of view of ABC, XYZ and MNO Companies. On January 1, 2020, ABC Co. leased a machinery to XYZ Co. with the following details: Cost of machinery to the lessor Residual value guarantee Annual rental payable at the beginning of each year starting January 1, 2020 ? Initial direct cost incurred by the lessee Useful life and lease term Implicit interest rate Present value of an annuity due of 1 for 4 years at 10% Present value of 1 for 4 years at 10% 3,760,100 400,000 250,000 4 years 10% 3.4869 0.6830 At the beginning of 2021, XYZ Co. subleased the equipment to MNO Co. where risk and rewards are substantially transferred to the new lessee, with the following details: Annual rental payable at the end of each year starting December 31, 2021 Initial direct cost incurred by the lessee 1,100,000 250,000 3 years Lease term Implicit interest rate Present value of an ordinary annuity of 1 for 3 years at 10% Present value of 1 for 3 years at 10% 10% 2.50 0.75 Required: Answer the following under the point of view of ABC, XYZ and MNO Companies.
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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