Chapter q PROBLEMS 1o, Generous, Inc. leased tw a make ive swents of P260,00o beginning January 1, 201,ev the lease term. December 31, 2023 residuual value reverts to the lessor at the end of the lcase usefial lite of the automobiles is 6 vears On JanuaTe lease requires Generous to executve use guaran of the automobiles will total P200, m The straight-line method for all its assets. G borrowing rate is :0%. The interest rate which is known to Generous, Inc., is 9%. implicit in the REQUIRED a At what amount should Generous, Inc record u (b) At what amount should the lease liability be use equipment on January 1, 2019P January 1, 2019, after making the firstgid P260,000 to the lessor? recognized at payment Prepare an amortization table for the five-year term lease d) Prepare journal entries in the books of Generous (e) Prepare the journal entry at the end of the lease t U Assuming that the residual value of the two years 2019 and 2020 to record all transactions relating to the lease record the transfer of the leased automobiles to the lessor auto amounted to P150,000 at the end of the lease term, prepare the journal entry to recora the transfer of the leased automobiles to the lessor. 4-2. On January 2019, Diana Corporation signed a 5-year non- cancelable lease for a machine with Calpol Company. The terms of the lease called for Diana to make annual payments of P86,680 at the begirning of each year starting January 1, 2019. The machine has an estimated useful life of 6 years and a P50,000 unguaranteed residual value at the end of the five year lease term. The machine reverts to the lessor at the end of the five-year lease term. Diana uses the straight-line method of depreciation for all of its plant assets. The rate implicit in this contract, which is known to Diana, is 10%. :The fair value of the machine on January 1, 2019 is