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On January 1 2020, a lessee leased an office space with two floors, for P1,000,000, payable every January 1, starting next year. The lease term
On January 1 2020, a lessee leased an office space with two floors, for P1,000,000, payable every January 1, starting next year. The lease term was three years, while the useful life of the office space was four years. The lessee paid P100,000 as leaase bonus. The lessor also reimbursed P30,000 to the lessee. The implicit interest rate is 8%.
On January 1, 2022, due to financial difficulties, the lessee and the lessor agreed to modify the lease as follows:
- Only 1 floor will be rented
- The annual lease payments will be reduced to P400,000
- The lease term will be extended for 2 more years
- The incremental borrowing rate at this date is 10%
How much is the interest expense for 2021?
How much is the gain or loss on partial termination as of date of modification, if any?
How much is the carrying value of this lease liability as of December 31, 2022?
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