Problem 10-19

Given: Answers:
PV = 1,352,000 Lease Liability = P 1,152,000 (B)
Equal Annual Payment = 200,000 Noncurrent LL = P 1,067,200 (C)
Interest = 10% Interest Expense = P 115,200 (B)
Useful life = 20 years

Date Payment 10% Interest Principal Present Value

1/1/2020 P 1,352,000
1/1/2020 P 200,000 - P 200,000 1,152,000
1/1/2021 200,000 P 115,200 84,800 1,067,200

Lease liability – Dec 31, 2020 P 1,152,000

Less: Current Portion – paid on Jan 1, 2021 (84,800)
Noncurrent Liability – Dec 31, 2020 P 1,067,200

Interest Expense - 2020 P 115,200

Depreciation – 2020 (PV/UL) P 67,600

Problem 10-20 Answer: Lease Liability = P 2,431,500 (B)

Given:
PV = 3,165,000
Implicit Interest Rate = 10%
Annual Payment = 500,000

PV P 3,165,000
Less: Annual Payment – Dec 31, 2020 500,000
Balance – Dec 31, 2020 2,665,000
Less: Annual Payment – Dec 31, 2021
Payment 500,000
Interest 266,500 233,500
Lease Liability – Dec 31, 2021 P 2,431,500

Problem 10-22 Answer: Current Lease Liability = P 85,000 (B)

Given:
Lease Liability = 1,350,000
Annual Payment = 200,000
Interest = 10%

Initial Lease Liability – Dec 31, 2020 P 1,350,000

Less: Annual Payment – Dec 31, 2020 200,000
Lease Liability – Dec 31, 2020 1,150,000
Less: Principal Payment (Current)
Annual Payment 200,000
Interest for 2021 (10% of 1,150,000) 115,000 85,000
Noncurrent Lease Liability – Dec 31, 2020 P 1,065,000

Problem 10-23 Answer: Lease Liability w/ Interest = P 4,578,000 (A)

Given:
Lease Liability – Jan 1, 2020 = 4,900,000
Annual Payment = 700,000
Implicit Interest Rate = 9%

Lease Liability – Jan 1, 2020 P 4,900,000

Less: Annual Payment – Jan 1, 2020 700,000
Lease Liability – Dec 30, 2020 4,200,000
Accrued Interest Payable – Dec 31, 2020 (9% of LL on Dec 30) 378,000
Total Lease Liability – Dec 31, 2020 P 4,578,000

Problem 10-27

Given: Answer:
Lease Liability – Dec 31, 2020 = 2,700,000 Reduction of Lease Liability
Annual Payment = 400,000 = 170,000 (D)
Implicit Interest Rate = 10% Interest Expense = 230,000 (B)
Lease Liability – Dec 31, 2021
= 2,130,000 (C)

Lease Liability – Dec 31, 2020 P 2,700,000

Less: Annual payment – Dec 31, 2020 400,000
Lease Liability – Dec 31, 2020 2,300,000

Annual Payment – Dec 31, 2021 400,000

Less: Interest for 2021 (10% of 2,300,000) 230,000
Reduction of lease liability – Dec 31, 2021 170,000

Lease Liability – Dec 31, 2020 2,300,000

Less: Reduction of lease liability – Dec 31, 2021 170,000
Lease Liability – Dec 31, 2021 2,130,000
Problem 10-28 Answer: Cost of Actual Purchase of Leased Equipment
= P 4,578,000 (A)
Given:
Right of Use Asset = 4,000,000
Accumulated Depreciation = 2,450,000
Lease Liability = 1,300,000
Cash Payment for Equipment = 1,600,000

Leased Equipment P 4,000,000

Less: Accumulated Depreciation 2,450,000
Carrying Amount 1,550,000
Cash Payment 1,600,000
Total 3,150,000
Less: Lease Liability 1,300,000
Cost of Actual Purchase of Leased Equipment P 1,850,000

Problem 10-30

Given: (Only the Important Details) Answer:

Annual Fixed Payment in Advance = 1,000,000 Initial Lease Liability
PV of an Annuity of 1 = 4.31 = 4,310,000 (B)
Initial Direct Cost = 350,000 Cost of Right of Use Asset
Lease Incentive Received = 150,000 = 4,810,000 (B)
Lease Bonus = 100,000 Annual Depreciation
Cost of Restoration = 200,000 = 962,000 (C)
Lease Term = 5 years Interest Expense
Implicit Interest Rate = 8% = 264,800 (C)

Initial Lease Liability (1,000,000 * 4.31) 4,310,000

Initial Direct Cost 350,000
Lease Bonus 100,000
Cost of Restoration 200,000
Less: Lease Incentive Received 150,000
Cost of Right of Use Asset 4,810,000
Useful Life / 5 years
Annual Depreciation 962,000

Date Payment 8% Interest Principal Present Value

1/1/2020 P 4,310,000
1/1/2020 P 1,000,000 - P 1,000,000 3,310,000
1/1/2021 1,000,000 264,800 735,200 2,574,800
1/1/2022 1,000,000 205,984 794,016 1,780,784