question archive Problem 4 On January 1, 2019, Shirley Corporation leased a machinery form Joel Company on a five-year lease term at P150,000 annual rental payments, paid in advance
Problem 4 On January 1, 2019, Shirley Corporation leased a machinery form Joel Company on a five-year lease term at P150,000 annual rental payments, paid in advance
Subject:AccountingPrice: Bought3
Problem 4 On January 1, 2019, Shirley Corporation leased a machinery form Joel Company on a five-year lease term at P150,000 annual rental payments, paid in advance. There is a bargain purchase option on December 31, 2023 of P240,000. The economic life of the equipment is 15 years. The interest rate implicit in this lease, which is known to Shirley is 12%. 14. At what amount should the asset be recorded on January 1, 2019? 15. Prepare an amortization for the entire term of the lease. 16. How much depreciation will be taken up by Shirley for the year 2019? 17. Prepare the entries in the books of Shirley to record the foregoing for the years 2019 and 2020. 18. Assume at the end of the lease term, Shirley exercised its purchase option. Give the entry for the exercise. 19. Give the journal entry at the end of the lease term assuming that Shirley failed o exercise its bargain purchase option.
