Question
Jan K Jang. Inc entered into a lease contract on January 1, 2017 with Jude Jar Co. for a 6 year lease of a cold
Jan K Jang. Inc entered into a lease contract on January 1, 2017 with Jude Jar Co. for a 6 year lease of a cold spring with a useful life of 8 years.
It was agreed that annual rental payable at the end of each year was Php 1,200,000
Because of the attractiveness of the cold spring, a payment was made by Jan K Jang Inc. to Jude Jar Co. to obtain the long-term lease: Php 200,000
Insurance, maintenance and taxes per year to be paid by Jan K Jang. Php 100,000
Initial direct cost incurred by JK Jang Inc. was Php 248,000
Unguaranteed residual value of the cold spring was Php 400,000
Cost of restoring the cold spring as required in the contract Php 800,000
The lease neither provides a transfer of title to the lessee nor a purchase option.
The implicit rate of the lease cannot be determined, but as inquired from Banko de Oro, the same financing can be obtained at the rate of 10%
a. What is the current portion to be presented in the statement of financial position for the lease liability as of December 31, 2017?
b. What is the noncurrent portion to be presented in the statement of financial position for the lease liability as of December 31, 2017?
c. What is the carrying amount of the lease liability as of December 31, 2017?
d. What is the accumulated depreciation on the right of use asset for 2018?
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