Laing Company is one of your audit clients who is experiencing liquidity problems. In an attempt to address this, it entered into an agreement on January 1, 2021 to sell its processing plant to Sili Company for P467,100. At the date of sale, the plant had a carrying amount of P400,000 and a future useful life of 5 years. Sili Company immediately leased the processing plant back to Laing Company. The terms of the lease agreements were:

• Lease term - 3 years
• Economic life - 5 years
• Annual rental payment (beginning December 31, 2021) - P165,000
• Residual value of the plant at the end of useful life - None
• Residual value of the plant at the end of lease term - P90,000
• Residual value guaranteed by Laing Company - P60,000
• Interest rate implicit in the lease (known to both parties) 6%

The lease is cancellable, but only with the permission of the lessor. At the end of the lease term, the plant is to be returned to Sili Company. In setting up the lease agreement, Sili Company incurred P9,418 of initial direct costs. The annual rental payment includes P15,000 to reimburse the lessor for maintenance costs incurred on behalf of the lessee.

Required:

1. Under the following cases, show computations for (a) recognized gain (loss) on the sale and leaseback, (b) interest income, (c) total lease related expenses (d) lease liability and (e) depreciation expense.

Case#1: Transfer does not qualify as a sale under IFRS 15 Case #2: Transfer qualifies as a sale under IFRS 15 (GRV scenario) Case #3: Transfer qualifies as a sale under IFRS 15 (Bargain purchase option scenario)