Tugap, Tiffany

Acc 211 ULO A-C

Let’s Analyze

Problem 1.

Question 1

Initial Lease Liability (450,000 x 3.791) P 1,705,950

Question 2

Cost of the right use of Asset (1,705,950 / 3,750,000 x 3,375,000) P 1,535,355

Question 3
Sale Price 3,750,000
Carrying Amount 3,375,000
Total Gain P 375,000

Fair Value 3,750,000

Right retained by Seller- lease equal to lease liability 1,705,950
Right transferred to buyer-lessor P 2,044,050

Gain to be recognized (2,044,050 / 3,750,000 x 375,000) P 204,405

Problem 2

Question 1

Lease Liability (720,000 x 3.17) P 2,282,400

Question 2

Cost of right of use asset (2,282,400 / 5,400,000 x 4,050,000) P 1,711,800

Question 3

Sale Price 5,400,000

Carrying Amount 4,050,000
Total Gain P 1,350,000

Fair Value 5,400,000

Right retained by Seller- lease equal to lease liability 2,282,400
Right transferred to buyer-lessor P 3,117,600

Gain to be recognized (3,117,600/ 5,400,000x 1,350,000) P 779,400

Question 4

Annual Depreciation of right use of asset (1,711,800 / 4 years) P 427,950