Question
On January 1, 2X18, an entity leased two (2) types of machinery for executive use. The lease required the entity to make five (5) annual
On January 1, 2X18, an entity leased two (2) types of machinery for executive use. The lease required the entity to make five (5) annual payments of P1,500,000 beginning January 1, 2X18. At the end of the lease term, December 31, 2X22, the entity guaranteed the residual value of the machinery at P1,000,000. The lease is qualified as finance lease. The interest rate implicit in the lease is 10%, and present value factors at 10% for five (5) periods are 4.17 for annuity due, 3.79 for an ordinary annuity, and 0.62 for present value of 1.
Required:
- What is the finance lease liability on December 31, 2X19?
- What is the interest expense for 2X19?
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
