At the beginning of current year, Day Company leased a new machine from Parr with the following pertinent information: Lease term Annual rental payable at beginning of each year Useful life of machine Implicit interest rate in lease Present value of an annuity of 1 in advance for 5 periods at 12% 4.04 Present value of an ordinary annuity of 1 for 5 periods at 12% 5 years 500,000 8 years 12% 3.60 The lease is not renewable and the machine reverts to Parr at the termination of the lease. The cost of the machine on Parr's accounting records is P3, 755,000.

At the beginning of current year, Day Company leased a new machine from Parr with the following pertinent information: Lease term Annual rental payable at beginning of each year Useful life of machine Implicit interest rate in lease Present value of an annuity of 1 in advance for 5 periods at 12% 4.04 Present value of an ordinary annuity of 1 for 5 periods at 12% 5 years 500,000 8 years 12% 3.60 The lease is not renewable and the machine reverts to Parr at the termination of the lease. The cost of the machine on Parr's accounting records is P3, 755,000.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 3MC: Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of...

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