Lease Accounting - Lesee

Problem 2

On January 1, 200, BB Co. Signed a long-ter lease for an office building. The term of the lease required BB Co. To pay P100,000 annually beg. December 31, 2020, and continuing each year for 30 years. On January 1, 2020 , the present value of the lease payments is P1,125,000 at the 8% interest rate implicit in the lease. What amount should be reported as lease liability on December 31, 2020?

A.1,025,000

B.1,115000

C. 1,125,000

D. 2,900,000

Problem 3

At the beginning of the current year, CC leased an equipment from a lessor with the following pertinent information.

Annual rental payable at the end of each year

500,000

Lease term

8 years

Useful life of equipment

10 years

Implicit Interest Rate

10%

PV of an ordinary annuity of 1 for 8 periods at 10%

5.33

Present Value of 1 for 8 periods at 10%

0.47

The entity has the option to purchase the equipment on the expiration of the lease term by payin P500,000.

There is reasonable certainty that the entity shall exercise the option. The entity incurred inital direct cost of P200,000.

1.What is the initial cost of the right of use asset?

A.2,900,000

B. 3,100,000

C. 2,865,000

D. 0

2.What is the interest expense for current year?

A.290,000

B. 310,000

C. 266,500

D. 316,500

3.What is the lease liabilityat year-end?

A.2,690,000

B. 2,790,000

C. 2,398,500

D. 2,848,500

4.What is the depreciation for current year?

A.310,000

B. 387,500

C. 290,000

D. 362,500

Can you show solution every problem