Column1 Column2 Column3

Requirement 1
Amortization Table

Date Payment Interest Expense

1/1/2020
12/31/2020 600,000 210,060
12/31/2021 600,000 174,965
12/31/2022 600,000 136,712

Annual Payment= 600,000

PVOA of 1 at 9% for 5 periods= 3.89
Present value 1/1/2020 2,334,000
Column4 Column5

Principal Present value

2,334,000
389,940 1,944,060
425,035 1,519,025
463,288 1,055,737
Column1 Column2 Column3
Requirement 2
2020 Journal Entries

Year Account Titles Debit

2020
1-Jan-20 Right of use asset 2,334,000
Lease Liability
to record the present value of the lease liability

31-Dec-20 Interest Expense 210,060

Lease Liability 389,940
Cash
to record the first rental payment

31-Dec-20 Depreciation Expense 466,800

Accumulated Depreciation
to record the depreciation for this year
 Column4 Column5

Credit

2,334,000
ease liability

600,000

466,800
Requirement 3
Remeasurement of Lease Liability

On January 1, 2023, the Lease Liability is measured using the new implicit interest rate of 12%

Annual rent for remaining 2 years of old lease term

Multiply by PVOA of 1 at 12% for 2 periods
Present value- 1/1/2023

Annual rental for 5 years starting 1/1/2025

Multiply by PVOA of 1 at 12% for 5 periods
Present value-1/1/2025
Multiply by PVOA of 1 at 12% for 2 periods
Present value-1/1/2023

The present value of the new rentals on 1/1/2025 is rediscounted for 2 periods on the date of extension on 1/1/2023

Present value of the remaining rentals of old lease term

Present value of rentals of extended lease term
Total present value- 1/1/2023
Less: Present value 12/31/2022
Increase in Lease Liability on 1/1/2023

Right of use asset- 1/1/2020

Less: Accumulated Depreciation-12/31/2022
Carrying amount- 12/31/2022
Increase in Lease Liability on 1/1/2023
New Carrying amount 1//1/2023

The measurement of the Lease Liability is an adjustment of the carrying amount of the right of use asset (IFRS 16, paragraph 3
 600,000
1.69
1,014,000

800,000
3.605
2,884,000
0.797
2,298,548

1,014,000
2,298,548
3,312,548
1,055,737
2,256,811

2,334,000
1,400,400
933,600
2,256,811
3,190,411
 Requirement 4
New Table Amortization
Column1 Column2 Column3 Column4 Column5

Date Payment Interest Principal

1/1/2023
12/31/2023 600,000 397,506 202,494
12/31/2024 600,000 373,206 226,794
12/31/2025 800,000 345,991 454,009
12/31/2026 800,000 291,510 508,490
12/31/2027 800,000 230,491 569,509
12/31/2028 800,000 162,150 637,850
12/31/2029 800,000 86,598 713,402
Requirement 4
Table Amortization
Column6 Column7

Present Value
3,312,548
3,110,054
2,883,260
2,429,251
1,920,761
1,351,252
713,402
 Requirement 5
2023 Journal Entries

Date Account Title Debit

1-Jan-23 Right of use asset 2,256,811

Lease Liability
to remeasure the lease liability

31-Dec-23 Interest Expense 397,506

Lease Liability 202,494
Cash
to record the annual rental

31-Dec-23 Depreciation Expense 455,773

Accumulated Depreciation
to record the annual depreciation

Total Lease term 10 years

Less: Expired term 3 years
Remaining term 7 years
Credit

2,256,811

600000

455,773