Solution of example 2.1, 2.2, 2.

3
Measurement at commencement date
time payments discount factor Present value year #
0 50000 1 50,000 1
1 50000 0.952380952380952 47,619 2
2 50000 0.90702947845805 45,351 3
3 50000 0.863837598531476 43,192 4
4 50000 0.822702474791882 41,135 5
5 50000 0.783526166468459 39,176 6
6 50000 0.746215396636627 37,311 7
7 50000 0.710681330130121 35,534 8
8 50000 0.676839362028687 33,842 9
9 50000 0.644608916217797 32,230 10
Total 405,391
lease liability 355,391
Subsequent measurement, without remeasurement of lease payment

Beginning Lease lease liability payment Remain LL (at the Interest (at the
year Liability (beginning of year) end of year) end of year)
0 355391 0 355391 17770
1 373161 50000 323161 16158
2 339319 50000 289319 14466
3 303785 50000 253785 12689
4 266474 50000 216474 10824
5 227298 50000 177298 8865
6 186162 50000 136162 6808
7 142971 50000 92971 4649
8 97619 50000 47619 2381
9 50000 50000 0 0

After new lease payment applicable at the beginning of year 2, new lease liability calculation
time payments discount factor Present value year #
2 54000 1 54,000 3
3 54000 0.952380952380952 51,429 4
4 54000 0.90702947845805 48,980 5
5 54000 0.863837598531476 46,647 6
6 54000 0.822702474791882 44,426 7
7 54000 0.783526166468459 42,310 8
8 54000 0.746215396636627 40,296 9
9 54000 0.710681330130121 38,377 10
Total new lease liability 366,464
 On the commencement date
DR Right of us
CR Lease liabil
CR Cash
AT the end of year 0
Interest on lease liability
DR Interest e
CR Lease liabil
At the beginning of year 1
Payment
DR Lease liabil
CR Cash

Ending LL year #
373161 1
339319 2
303785 3
266474 4
227298 5
186162 6
142971 7
97619 8
50000 9
0 10
Remearsurement of lease liability after CPI changing
New lease liability 366464
Old lease liability 339319
Increase in LL 27145

DR right of use asset 27145

CR lease liability 27145
mmencement date
405,391
355,391
50,000

n lease liability
17770
17770
inning of year 1

50000
50000
Measurement at commencement date
time payments discount factor Present value year
0 50000 1 50,000 1
1 50000 0.95238095238095 47,619 2
2 50000 0.90702947845805 45,351 3
3 50000 0.86383759853148 43,192 4
4 50000 0.82270247479188 41,135 5
5 50000 0.78352616646846 39,176 6
6 50000 0.74621539663663 37,311 7
7 50000 0.71068133013012 35,534 8
8 50000 0.67683936202869 33,842 9
9 50000 0.6446089162178 32,230 10
Total 405,391
lease liability 355,391 355391
Subsequent measurement, without remeasurement of lease payment

Beginning lease liability Interest (at

Remain LL (at the
year Lease payment the end of Ending LL year
end of year)
Liability (beginning of year) year)

0 355391 0 355391 17770 373161 1

1 373161 50000 323161 16158 339319 2
2 339319 50000 289319 14466 303785 3
3 303785 50000 253785 12689 266474 4
4 266474 50000 216474 10824 227298 5
5 227298 50000 177298 8865 186162 6
6 186162 50000 136162 6808 142971 7
7 142971 50000 92971 4649 97619 8
8 97619 50000 47619 2381 50000 9
9 50000 50000 0 0 0 10

After new lease payment applicable at the beginning of year 2, new lease liability calculation
time payments discount factor Present value year
2 54000 1 54,000 3
3 54000 0.95238095238095 51,429 4
4 54000 0.90702947845805 48,980 5
5 54000 0.86383759853148 46,647 6
6 54000 0.82270247479188 44,426 7
7 54000 0.78352616646846 42,310 8
8 54000 0.74621539663663 40,296 9
9 54000 0.71068133013012 38,377 10
Total new lease liability 366,464
 Beginning lease liability Interest (at
Remain LL (at the
year Lease payment the end of Ending LL year
end of year)
Liability (beginning of year) year)

2 366464 54000 312464 15623 328087 3

3 328087 54000 274087 13704 287792 4
4 287792 54000 233792 11690 245481 5
5 245481 54000 191481 9574 201055 6
6 201055 54000 147055 7353 154408 7
7 154408 54000 100408 5020 105429 8
8 105429 54000 51429 2571 54000 9
9 54000 54000 0 0 0 10
 On the commencement date
DR Right of use asset 405,391
CR Lease liability 355,391
CR Cash 50,000
AT the end of year 1
Interest on lease liability
DR Interest expense 17770
CR Lease liability 17770
At the beginning of year 2
Payment
DR Lease liability 50000
CR Cash 50000
AT the end of year 2
Interest on lease liability

DR Interest expense 15623

CR Lease liability 15623

At the beginning of year 3
Payment
DR Lease liability 54000
CR Cash 54000
AT the end of year 3
Interest on lease liability
DR Interest expense 15623
CR Lease liability 15623
At the beginning of year 4
Payment
DR Lease liability 54000
CR Cash 54000
AT the end of year 4
Interest on lease liability
DR Interest expense 13704
CR Lease liability 13704
Remearsurement of lease liability after CPI changing

New lease liability 366464

Old lease liability 339319
Increase in LL 27145

DR right of us 27145
CR lease liabil 27145
 time payments discount factor Present value year
0 800000 1 800,000 1
1 800000 0.94339622642 754,717 2
2 800000 0.88999644001 711,997 3
3 800000 0.83961928303 671,695 4
4 800000 0.79209366324 633,675 5
5 800000 0.74725817287 597,807 6
6 800000 0.70496054044 563,968 7
7 800000 0.66505711362 532,046 8
8 800000 0.62741237134 501,930 9
9 800000 0.59189846353 473,519 10
Total 6,241,354
lease liability 6,241,354

lease liability
Beginning Lease payment Remain LL (at the Interest (at the
year Ending LL
Liability (beginning of end of year) end of year)
year)
0 6241354 800000 5441354 326481 5767835
1 5767835 800000 4967835 298070 5265905
2 5265905 800000 4465905 267954 4733859
3 4733859 800000 3933859 236032 4169891
4 4169891 800000 3369891 202193 3572084
5 3572084 800000 2772084 166325 2938410
6 2938410 800000 2138410 128305 2266714
7 2266714 800000 1466714 88003 1554717
8 1554717 800000 754717 45283 800000
9 800000 800000 0 0 0
 AT the end of year N+1:
Interest on lease liability
DR Interest expens 298070
CR Lease liability 298070
At the beginning of year 2
Payment
DR Expense (P/L) 8000
DR Lease liability 800000
CR Cash 808000

year

1
2
3
4
5
6
7
8
9
10