Solution-What is the interest expense for the current year

What is the interest expense for the current year

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Reference no: EM132847087

Question - At the beginning of the current year, Galilee Company leased a building from a lessor with the following pertinent information:

Annual rental payable at the end of each year P1,000,000

Initial direct cost paid 400,000

Lease incentive received 100,000

Leasehold improvement 200,000

Purchase option that is reasonably certain to be exercised 500,000

Lease term 5 years

Useful life of machinery 8 years

Implicit interest rate 10%

PV of an ordinary annuity of 1 at 10% for 5 periods 3.79

PV of 1 at 10% for 5 periods 0.62

Required -

1) What is the cost of the right of use asset?

2) What is the depreciation for the current year?

3) What is the interest expense for the current year?

4) What is the lease liability at yearend?

Reference no: EM132847087

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What is the interest expense for the current year

Reference no: EM132847087

Reference no: EM132847087

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