Problem 7-1

1.)
GENERAL JOURNAL
Date Page Number 01
2020 Descriptions PR Debit Credit
1-Jan Right of Use Asset Php 6,668,150
Lease Liability Php 6,468,150
Cash 200,000

Lease Liability 1,500,000

Cash 1,500,000

31-Dec Insurance Expense 100,000

Cash 100,000

Tax Expense 50,000

Cash 50,000

Depreciation Expense 1,333,630

Accumulated Depreciation 1,333,630

Interest Expense 397,452

Interest Payable 397,452

Lease Liability
Annual Payments Php 1,500,000
Present Value factor x 4.3121
PV of Lease Payments Php 6,468,150

Right of Use Asset

Initial Direct Costs Php 200,000
Initial Measurement of Lease Liability 6,468,150
Right of Use Asset Php 6,668,150

Date Payments Interest Prin Payments Carrying Amt

1/1/2020 1,500,000 1,500,000 4,968,150
1/1/2021 1,500,000 397452.00 1,102,548 3,865,602
1/1/2022 1,500,000 309248.16 1,190,752 2,674,850
1/1/2023 1,500,000 213988.0128 1,286,012 1,388,838
1/1/2024 1,500,000 111,162 1,388,838 0
Depreciation
Php 6,668,150
5
= 1,333,630 annually

2.)
Carrying Amount of ROUA
ROUA Php 6,668,150
Accumulated Dep. - 12/31/2022 (4,000,890)
Carrying Amount - 12/31/2022 Php 2,667,260

3.)
Expenses Related to Lease for 12/31/2020
Interest Expense Php 397,452
Tax Expense 50,000
Insurance Expense 100,000
Depreciation Expense 1,333,630
Total Php 1,881,082

4.)
12/31/2021 Current Portion Php 1,190,752
Non-Current Portion 2,674,850
Carrying Amount Php 3,865,602

Problem 7-2

1.)
Right of Use Asset

PV of Lease Payments Php 4,399,965.82

PV of Residual Value Guaranteed 32,200
Initial Measure of Lease Liability Php 4,432,165.82
Cost of ROUA Php 4,432,165.82

2.) Current Portion of Lease Liability - 12/31/2020 Php 276,495

3.) Non-Current Portion Php 3,213,505
Date Payments Interest Prin Payments Carrying Amt
12/31/2019 4432165.82
12/31/2019 695,295 695,295 3,736,871
12/31/2020 695,295 448424.4984 246,871 3,490,000
12/31/2021 695,295 418800.03821 276,495 3,213,505
12/31/2022 695,295 385620.64279 309,674 2,903,831
12/31/2023 695,295 348459.71993 346,835 2,556,996
12/31/2024 695,295 306839.48632 388,456 2,168,540
12/31/2025 695,295 260224.82468 435,070 1,733,470
12/31/2026 695,295 208016.40364 487,279 1,246,191
12/31/2027 695,295 149542.97208 545,752 700,439
12/31/2028 695,295 84052.728725 611,242 89,197
12/31/2029 99,901 10703.64 89,197 0

4.)
Lease Related Expenses
Depreciation Expense Php 443216.58
Interest Expense 448,424.50
Tax Related Executory Cost 24,705
Total Php 916,346.08