PROBLEM 1

SOLUTION 1
ANNUAL RENTALS 1,440,000
EXECUTORY COSTS -49,410
MINIMUM LEASE PAYMENTS 1,390,590
MULTIPLY BY: PVAA 6.33
PV OF MINIMUM LEASE PAYMENT 8,802,435
THE AMOUNT TO BE CAPITALIZED AS THE IMMATERIAL
8,800,000
COST OF RIGHT OF USE OF ASSET DIFFERENCE

SOLUTION 2 & 3
AMORTIZATION TABLE
DATE ANNUAL PAYMENT INTEREST EXPENSEAMORTIZATION PRESENT VALUE
12/31/2020 8,800,000
12/31/2020 1,390,590 0 1,390,590 7,409,410
12/31/2021 1,390,590 889129.2 501,461 6,907,949
12/31/2022 1,390,590 828953.904 561,636 6,346,313
CURRENT PORTION NON-CURRENT PORTION

SOLUTION 4
FAIR VALUE OF THE PROPERTY 8,800,000
DIVIDED BY: LEASE YEAR 10
DEPRECIATION 880,000

SOLUTION 5
DEPRECIATION EXPENSE 880,000
INTEREST EXPENSE 889,129
EXECUTORY COST 49,410
TOTAL LEASE-RELATED EXP. 1,818,539

PROBLEM 2
SOLUTION 6
JULY 1 , 2020 TO JUNE 30, 2021 60,000
JULY 1 , 2021 TO JUNE 30, 2022 90,000
JULY 1, 2022 TO JUNE 30, 2023 210,000
TOTAL 360,000
DIVIDE BY: LEASE YEAR 3
RENT EXPENSE PER YEAR 120000
LESS: PAYMENT FOR 1ST YEAR 60,000
ACCRUED RENT PAYABLE, JUNE 30,2021 60,000

SOLUTION 7
PERIODIC PAYMENT 400,000
MULTIPLY BY: PVAA OF 14% FOR 10 PERIOD 5.95
PV OF PERIODIC PAYMENT 2380000
FV OF LEASED ASSET 2,380,000

AMORTIZATION TABLE FOR 2ND LEASE

DATE ANNUAL PAYMENT INTEREST EXP. AMORTIZATION PRESENT VALUE
JUNE 30,2021 2,380,000
JUNE 30,2021 400,000 0 400,000 1,980,000
JUNE 30,2022 400,000 277200 122,800 1,857,200

SOLUTION 8
FIRST LEASE 60,000
SECOND LEASE 122,800
CURRENT LIABILITIES FOR JUNE 30,2021 182,800

SOLUTION 9
RENT EXPENSE (1ST LEASE) 120000
INTEREST EXPENSE 277200
DEPRECIATION EXPENSE (2,380,000/10) 238,000
TOTAL LEASE-RELATED EXPENSE 635200