Problem 1 At the beginning of 2021, VHF Industries acquired a machine with a fair value of P6,000,000 by signing a six-year lease. The useful life of the machine is 8 years. The lease is payable in four annual payments of P1,291,992.62 at the beginning of each year. VHF also has the option to buy the machine at P100,000 at the end of the lease term. At the inception of the lease, VHF is certain that it will exercise the purchase option. At the beginning of 2023, a new model of the machine was released by its manufacturer, and even though the purchase option was considered a giveaway, VHF determined that it will just buy the newer model at the end of the lease term. The revised discount rate on this date is 8%. 1. What is the implicit rate on the lease? 2. How much is the interest incurred by VHF in 2022? 3. How much is the adjustment in the lease liability and right of use asset on January 1, 2023? Indicate if increase or decrease. 4. How much is the carrying amount of the right of use asset at the end of 2023? 5. How much is the carrying amount of the lease liability on December 31, 2023