Lease Payments (2,000,000 x 3.

993) 7,986,000
Residual Value Guarantee (900,000 x .681) 612,900
Total Present Value 8,598,900

AMORTIZATION TABLE

DATES Total Payment Interest Payment Principal Payment Present Value

Jan 1, 2020 8,598,900
Dec 31, 2020 2,000,000 687,912 1,312,088 7,286,812
Dec 31, 2021 2,000,000 582,945 1,417,055 5,869,757
Dec 31, 2022 2,000,000 469,581 1,530,419 4,339,338
Dec 31, 2023 2,000,000 347,147 1,652,853 2,686,485
Dec 31, 2024 2,000,000 213,515 1,786,485 900,000

Total 10,000,000 2,301,100 7,698,900

*P214,919 or 1,404 discrepancy due to roundings.

2020
Jan-01 Right of Use Asset 8,598,900
Lease Payable 8,598,900
Acquisition of equiment under finance lease.

Dec-31 Lease Payable 1,312,088

Interest Expense 687,912
Cash 2,000,000
1st Installment Payment
(8,598,900 x 8%) = 687,912

31 Depreciation Expense 769,890

Accumulated Depreciation 769,890
2020 depreciation provision
(8,589,900 - 900,000)/10 = 640,825

31 Income & Expense Summary 1,328,737

Interest Expense 687,912
Depreciation Expnse 640,825
Closing Entry

2021
Jan-01 No reversing entry for 2020

Dec-31 Lease payable 1,417,055

Interest Expense 582,945
Cash 2,000,000

31 Depreciation Expense 769,890

Accumulated Depreciation 769,890
 2021 depreciation provision

31 Income & Expense Summary 1,223,770

Interest Expense 582,945
Depreciation Expense 640,825

2024
Dec-31 Interest Expense 1,786,485
Lease Liabilty 213,515
Cash 2,000,000

Dec-31 Accumulated depreciation 3,849,450

Lease Payable 900,000
Right of use asset 8,598,900

5. 2024 Loss on finance lease 300,000

Cash 300,000
(900,000 - 600,000)

6. 2024 No additional entry

Present Value