1. KonichiWhat’sUpSaInyoMgaKa-Salompas Company grants Ally Company first
three months rent-free under a three-year operating lease. The lease is effective
April 1,2021 and provides for a monthly rental of P12,000, payment of which will
begin on July 1, 2021.
How much is the rent income reported in JoshuaSalom Company’s profit or loss
for the year ended December 31, 2021? P99,000
2. On January 1, 2019, Morrey Chicken Co. purchased equipment. On the same
date, Morrey Chicken Co. leased the equipment to another entity under an
operating lease. The lease term is for 5 years with the following rental payments
in advance:
January 1, 2019
January 1, 2020
January 1, 2021
January 1, 2022
January 1, 2023
P1,000,000
P1,000,000
P1,400,000
P1,700,000
P1,900,000
What is the gross rental income for the year ended December 31, 2019?
P1,400,000
3. What is the gross rental income for the year ended December 31, 2019?
P800,000
4. On January 1, 2021, Camilla Foods Corp. leased equipment to Daniela
Mondragon, Inc. information on the lease is shown below:
Cost of equipment: 1,200,000
Useful life of equipment: 5 years
Lease term: 4 years
Annual rental payable at the end of each year: 440,000
Additional information:
The annual lease payment includes P36,196 pertaining to insurance taken by Camilla
on the equipment leased. Direct costs incurred by Camilla in negotiating the lease
amounted to P80,000. The implicit rate, after adjustment for the foregoing items, is 10%.
How much is the gross investment in the lease on January 1, 2021? P1,615,216
5. How much is the net investment in the lease on January 1, 2021? P1,280,000
6. How much is the unearned interest income on January 1, 2021? P335,216
7. How much is the carrying amount of lease receivable as of December 31, 2021?
P1,004,196
8. How much is the interest income for the year ended December 31, 2021?
P128,000
9. Joshua Salom is a dealer in machinery. On January 1, 2023, a machinery was
leased to Cong Velasquez with the following provisions:
Annual rental payable at the end of each year: P2,000,000
Lease term and useful life of machinery: 5 years
Cost of machinery: 6,000,000
Residual value – unguaranteed: P1,000,000
Implicit interest rate: 12%
PV of an ordinary annuity of 1 for 5 periods at 12%: 3.60
PV of 1 for 5 periods at 12%: 0.57
There is no transfer of title nor bargain purchase option.
What amount should be reported as sales revenue? P7,200,000
10. What is the interest income for 2023? P932,400
11. What amount of cost of goods sold should be reported? P5,430,000
12. On January 1, 2021, Team Payaman Company leased equipment from a lessor
with the following information:
Annual rental payable every December 31: 2,000,000
Residual value guarantee: 1,000,000
Initial direct cost: 600,000
Estimated dismantling and restoration cost required by contract at present value:
780,000
Annual executory cost paid by the entity: 100,000
The lease term is 4 years while the equipment’s useful life is 8 years.
The implicit rate in the lease, known by the entity, is 10%.
The present value of an ordinary annuity of 1 at 10% for 4 periods is 3.17
The present value of 1 at 10% for 4 periods is: 0.68
What is the initial lease liability? P7,020,000
13. What is the cost of the right of use asset? P8,400,000
14. At the beginning of current year, Fumishun Base Co. sold an equipment with
remaining life of 10 years and immediately leased it back for 4 years at the
prevailing market rental.
Sale price at fair value: 6,000,000
Carrying amount of equipment: 4,500,000
Annual rental payable at the end of each year: 800,000
Implicit interest rate: 10%
Present value of an ordinary annuity of 1 at 10% for four periods: 3.17
What amount should be reported as initial lease liability? P2,536,000
15. What is the cost of right of use asset? P1,902,000
16. What amount should be reported as gain on right transferred to the buyer-lessor?
P866,000
17. What amount should be reported as annual depreciation of the right of use
asset? P475,000
18. What is the net annual rental income of the buyer-lessor? P200,000
19. At the beginning of current year, VIYLine Cosmetics Co. sold a machine and
immediately leased it back. The following data pertain to the sale and leaseback
transaction:
Sale price at fair value: 5,000,000
Carrying amount of machine: 6,000,000
Annual rental payable at the end of each year: 500,000
Lease term: 5 years
Remaining life of machine: 20 years
Implicit interest rate: 6%
Present value of an ordinary annuity of 1 at 6% for 5 periods: 4.21
(no question given so just guess)
20. What is cost of right of use asset? P2,526,000