Illustrative 1

1. Lease Liability ₱ 100,000.00

PVF of Ordinary Annuity 3.0372
initial lease liability ₱ 303,720.00

2. Cost of right use of asset ₱ 303,720.00

3. Annual Depreciation ₱ 303,720.00

useful life 5 years
₱ 60,744.00

4. costs ₱ 303,720.00
accumulated depreciation -₱ 60,744.00
Carrying amount, 12/31/2022 ₱ 242,976.00

5 Date Lease Payments Interest expense Principal

1/1/2022
12/31/2022 ₱ 100,000.00 ₱ 36,446.00 ₱ 63,554.00
12/31/2023 ₱ 100,000.00 ₱ 28,820.00 ₱ 71,180.00
12/31/2024 ₱ 100,000.00 ₱ 20,278.00 ₱ 79,722.00
12/31/2025 ₱ 100,000.00 ₱ 10,736.00 ₱ 89,264.00
Carrying Amount
₱ 303,720.00
₱ 240,166.00
₱ 168,486.00 (PV of 3 periods) Shortcut: CA,end = CA,beg x 1.rate less LP)
₱ 89,264.00
₱ -
Illustrative 2
1. Fixed Annual Payment
(600,000 x 4.36) ₱ 2,616,000.00 5. costs
RVG (200,000 x 0.56) ₱ 112,000.00 accumulated depreciation
initial lease liability ₱ 2,728,000.00 Carrying amount 12/31/2022

2. initial lease liablity ₱ 2,728,000.00 6. CA, end = CA, beg x 1.Rate - LP

LB ₱ 224,000.00 = 2728000 x 1.1 - 600000
DC ₱ 400,000.00 = 2,400,800

cost of the right use of asset ₱ 3,352,000.00

3. Annual depreciation
(3352000-200000) ₱ 3,152,000.00
useful life 6 years
₱ 525,333.00

4. interest expense (2728000

x 10% ₱ 272,800.00
 ₱ 3,352,000.00
-₱ 525,333.00
₱ 2,826,667.00
Illustrative 3
1. Lease payments (1,000,000 x 4.3121) ₱ 4,312,100.00
Option (500,000 x 0.6806) ₱ 340,300.00
Initial lease liability ₱ 4,652,400.00

2. initial lease liability ₱ 4,652,400.00

initial direct cost ₱ 250,000.00
lease incentive received -₱ 150,000.00
cost of the right use of asset ₱ 4,752,400.00

3. annual depreciation (4752000 - 600,000) ₱ 4,152,400.00

useful life 6 years
₱ 692,067.00

4. interest expense (4652400 - 1000000) x 8% ₱ 292,192.00

Illustrative 3

Date Lease payments Interest Expense Principal Carrying Amount

1/1/2022 ₱ 4,652,400.00
1/1/2022 ₱ 1,000,000.00 - ₱ 1,000,000.00 ₱ 3,652,400.00
1/1/2023 ₱ 1,000,000.00 ₱ 292,192.00 ₱ 707,808.00 ₱ 2,944,592.00
1/1/2024 ₱ 1,000,000.00 ₱ 235,576.00 ₱ 764,433.00 ₱ 2,180,159.00
1/1/2025 ₱ 1,000,000.00 ₱ 174,413.00 ₱ 825,587.00 ₱ 1,354,572.00
1/1/2026 ₱ 1,000,000.00 ₱ 108,366.00 ₱ 891,634.00 ₱ 462,938.00
1/1/2027 ₱ - ₱ 37,062.00 -₱ 37,062.00 ₱ 500,000.00
(462938 x 8%)
Illustrative 4
1 Cost of right use of asset ₱ 3,500,000.00
cash payment ₱ 4,000,000.00
lease liabilty -₱ 3,800,000.00
cost of equipment purchased ₱ 3,700,000.00
Illustrative 5
1. year 1 (800,000 x 6/12) ₱ 400,000.00
year 2 ₱ 1,250,000.00
year 3 ₱ 1,250,000.00
year 4 ₱ 1,250,000.00
year 5 ₱ 1,250,000.00
₱ 1,080,000.00
Illustrative 6

2017 (100,000 x 12) ₱ 1,200,000.00

2018 (150,000 x 12) ₱ 1,800,000.00
2019 (200,000 x 12) ₱ 2,400,000.00
2020 (250,000 x 12) ₱ 3,000,000.00
₱ 8,400,000.00
4 years
₱ 2,100,000.00

Cumulative Col vs. Cumulative RI

3,000,000 < 4,200,000 Rec. 1,200,000
Illustrative 7

Rent income ₱ 500,000.00

IDC -₱ 15,000.00 (150,000/15 yrs)
DE -₱ 120,000.00
Insurance and property tax -₱ 90,000.00
Net Rent income ₱ 275,000.00

Illustrative 8
Rent income ₱ 900,000.00
Lease bonus ₱ 100,000.00 (500,000/5 yrs)
Illustrative 9
1. Costs ₱ 1,518,650.00
PVF of Annuity 3.0373
Annual Rental ₱ 500,000.00
useful life 4 years
Gross investment ₱ 2,000,000.00

2. Net investment (1,518,650 - 66300) ₱ 1,584,950.00

3. Unearned Interest Income

( 2,000,000 - 1,584,950) ₱ 415,050.00

4. CA, end 2022 5. P375655 (*1243445 - 867790) *1584950 x 1.1 - 500000)

CA, end 2023 6. P867790
CA of lease receivable 12/31/2022 ₱ 1,243,445.00
Illustrative 10
1. Costs ₱ 3,760,100.00
PV of RV -₱ 273,200.00 (400k x 0.6830)
PV of rentals ₱ 3,486,900.00
PVF 3.4869
Annual Rental ₱ 1,000,000.00

2. Gross Investment [(1M x 4) + 400k)] ₱ 4,400,000.00

3. Net investment ₱ 3,760,100.00

4. Unearned Interest Income (4,400,000 - 3,760,100) ₱ 639,900.00

Illustrative 11
1. Costs ₱ 3,449,600.00
PVF 4.312
Annual Rental ₱ 800,000.00

2. Gross investment (800,000 x 5) ₱ 4,000,000.00

3. Net investment ₱ 3,449,600.00

4. Unearned interest income (4000000 - 3449600) ₱ 550,400.00

Illustrative 12
1. Gross Rentals ₱ 4,000,000.00
RV ₱ 200,000.00 Guaranteed
Gross investment ₱ 4,200,000.00 Net investment ₱ 3,156,820.00
PV of RV
2. PV of Rentals (800k x
3.7908) ₱ 3,032,640.00 Sales ₱ 3,156,820.00
PV of RV (200k x 0.6209) ₱ 124,180.00 Costs ₱ 2,000,000.00
Net investment ₱ 3,156,820.00 IDC ₱ 100,000.00
PV of RV
3. Gross Investment ₱ 4,200,000.00 COGS ₱ 2,100,000.00
Net investment -₱ 3,156,820.00
Unearned interest income ₱ 1,043,180.00 Gross profit ₱ 1,056,820.00

CA, end = CA, beg x 1.rate - LP

= 3156820 x 1.1 - 800k
= 2672502
 Illustrative 13
1. Gross Investment (500k x 4 ) + 200k]
Unguaranteed
₱ 3,156,820.00 2. Net Investment [(500k x 3.312) + (200k x 0.735)]
-₱ 124,180.00

₱ 3,032,640.00 3. Unearned Interest Income (2200000 - 1803000)

₱ 2,000,000.00
₱ 100,000.00 4. Sales [(500k x 3.312) + (200k x 0.735)]
-₱ 124,180.00
₱ 1,975,820.00 5. Cost of Goods Sold (1000000 + 100000)

₱ 1,056,820.00 6. Gross profit (1803000 - 1100000)

₱ 2,200,000.00

₱ 1,803,000.00

₱ 397,000.00

₱ 1,803,000.00

₱ 1,100,000.00

₱ 703,000.00