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CPA(U) Final Level Practice Questions - ICPAU Certified Public Accountant Of Uganda Final Level Exam

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A lessee enters into a 5-year lease of an office building. The annual lease payments are UGX 80,000,000, payable at the end of each year. The lessee's incremental borrowing rate is 10% per annum. The present value of an ordinary annuity for 5 years at 10% is 3.791. What is the initial carrying amount of the lease liability and the corresponding Right-of-Use (ROU) asset at lease commencement, assuming no initial direct costs?
Correct Answer:
UGX 303,280,000

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