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How much depreciation will be taken up by sheryl for year

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Reference no: EM132616196

On January 1, 2020, Sheryl Corporation leased a machinery from Chris 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, 2024 of P240,000. The economic life of the equipment is 15 years. The interest rate implicit in this lease, which is known to Sheryl is 12%.

REQUIRED:

Problem (a) At what amount should the asset be recorded on January 1, 2012?

Problem (b) Make an amortization table for the entire term of the lease.

Problem (c) How much depreciation will be taken up by Sheryl for the year 2020?

Problem (d) Prepare the entries in the books of Sheryl to record foregoing for the years 2020 and 2021.

Problem (e) Assume that at the end of the lease term, Sheryl exercised its purchase option. Give the entry for the exercise.

Problem (f) Give the journal entry at the end of the lease term assuming that Sheryl failed to exercise its bargain purchase option.

Reference no: EM132616196

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