On January 1, 2021, Norway Company leased machinery from Chile Company for 5 years. The useful...
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On January 1, 2021, Norway Company leased machinery from Chile Company for 5 years. The useful life of the asset is 10 years. Equal annual payments under the lease are P1,800,000 and are due on December 31 each year starting December 31, 2021. The bargain purchase option to be reasonably exercised at the end of the lease term is P300,000. The incremental borrowing rate is 12%. The implicit interest rate is 14%. (Use 2 decimal places for PV factor). How much is the depreciation expense on December 31, 2021? On January 1, 2021, Norway Company leased machinery from Chile Company for 5 years. The useful life of the asset is 10 years. Equal annual payments under the lease are P1,800,000 and are due on December 31 each year starting December 31, 2021. The bargain purchase option to be reasonably exercised at the end of the lease term is P300,000. The incremental borrowing rate is 12%. The implicit interest rate is 14%. (Use 2 decimal places for PV factor). How much is the depreciation expense on December 31, 2021?
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To calculate the depreciation expense on December 31 2021 we need to determine the lease liability a... View the full answer
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
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