LEASES|1

LEAS
ES(
IFRS1
6)

- Acontr
actorpartofacontr
actthatc
onve
ystherighttocont
rolt
heus
eofanas
set
,theunde
rlyi
ng
as
set
,foraperi
odofti
mei nexc
hangeofacons
ide
ration.

- LES
SEE–us
erofal
eas
edas
set

- LES
SOR–owne
rors
uppl
ierofal
eas
edas
set

I
AS1
7vsI
FRS1
6

- I
AS1
7:Ac
count
sforope
rat
ingl
eas
eandf
inanc
ele
ase

- Ope
rat
ingl
eas
e:

- Fi
nanc
ele
ase
:

- IFRS16:Removesthedi
sti
nct
ionbet
we e
nf inanceandoperati
nglease(l
ess
ee’
sPOVonl y)thusFinance
andOpe rat
ingLeaseareacc
ounte
dt hes amewayi nt hel e
see’
sbook.Butont hele
s s
or’
sbook,t he
account
inginIAS17st
il
lappl
ies
;wherein,financ
eandoper ati
ngleas
earesti
llac
count
e ddif
fer
ently.

- EXCEPTI
ON:Low-val
ueasse
tsandS hor
t-t
ermleas
es.Ac
countforl
easepayme
ntsasane
xpe
nseona
st
raight
-li
nebas
isovert
heleas
ete
rmf orthef
oll
owingt
wot ype
sofle
ase:

- SHORTTERM LEAS
ES– whe
ret
hel
eas
ete
rmi
satmos
t12mont
hs;appl
iedt
oapar
tic
ularc
las
sof
ass
ets

- LOW VALUELEAS
ES–unde
rlyi
ngas
sethasal
owval
uewhe
nne
w;appl
iedonal
eas
ebyl
eas
ebas
is.

LES
SOR’
SBOOK

A.Fi
nanc
eLe
ase

- I
nsubs
tanc
e,i
fther
isksandr
ewar
dsove
rtheunde
rlyi
ngas
setar
etr
ans
fer
redt
othel
ess
ee

- t
hel
eas
eise
ithe
ras
ale
stypel
eas
e(S
TL)ordi
rec
tfi
nanc
ingl
eas
e(DFL)

Leas
ePayme nt
s
ReasonableCer
tainPurc
haseOpt
ion
Resi
dualValue( Guar
antee
dorUnguar
ant
eed)
GROS SINVESTMENT

PVoftheGros
sInvest
mentorCos
toft
heAs
set+I
nit
ial
Di
rec
tCostCapit
ali
zed(i
fDFL)
NETINVES
TMENT *

*T
heCar
ryi
ngAmountoft
heLe
aseRe
cei
vabl
eise
qualt
othePVort
hene
tinve
stme
nt

GrossInvest
me nt
(NetInvestment)
TOTALFI NANCIALREVENUE
 LEASES|2

Fai
rVal ueofLeasePayme nts
ReasonableCert
ainPur chaseOption
Resi
dualVal ueGuarantee
OR
Pres
e ntValueofLeasePayme nt
Pres
e ntValueofReasonabl eCer
tainPurchas
eOpt
ion
Pres
e ntValueofResidualValueGuar ant
ee
SALES

Costoft heAsse
t
Ini
tialDirec
tCost
(PresentValueofUnguar
ant
eedRe
sidualVal
ue)
COSTOFS ALES

Sale
s
CostofSal
es
SELLINGPROFI
T*

*S
ell
ingPr
ofi
tisr
ecogni
zedi
nful
lthepe
riodofs
ale
.

B.Ope
rat
ingLe
ase

- I
nsubs
tanc
e,i
fther
isksandr
ewar
dsove
rtheunde
rlyi
ngas
setr
emai
nwi
tht
hel
ess
or

LES
EE’
S BOOK

- Al
lle
ase
sar
eac
count
edasf
inanc
ele
ase(
exc
epts
hor
t-t
erml
eas
esandl
owval
uel
eas
es)

- RI
GHTOFUS EAS
SET–anas
sett
hatr
epr
ese
ntst
hel
ess
ee’
sri
ghtt
ous
eanunde
rlyi
ngas
setf
ort
he
l
easet
erm.

- UNDERLYI
NGAS
SET

 Nos
ubs
tant
iver
ight
stos
ubs
tit
ute

 Nobe
nef
itsf
rom s
ubs
tit
uti
on

- RI
GHTT
OCONT
ROLUS
Ede
pendson:DI
RECT
IONandECONOMI
CBENEFI
T

 DI
RECT
ION–ove
rhowandwhatpur
pos
etheas
seti
sus
ed

 ECONOMI
CBENEFI
T–f
rom t
heus
eoft
heas
setwi
llf
lowt
othel
ess
ee

AtComme
nce
mentDat
e:

Ri
ghtofUs
eAs
set(
@cos
t)x
x
 LEASES|3

Le
aseLi
abi
li
ty x
x

Init
ialmeasurementofthel e
asedli
abil
it
y
+ Le asePrepayme nt
s
+ I nit
ialdi
rectcostincur
redbyt hel
essee
+ PVofe s
timatedRe s
tor
ation,RemovalandDi
smant
li
ng
Cost
- 
  
  
   
 Leaseince
ntivesrecei
ved
RI
GHTOFUS
EAS
SET

PVofFutureLe asepayment*
+ PVofanyr easonablecert
ainpurchas
eopt
ion
+ PVoft heresidualvalueguarant
ee
-
   
  
  
  I
ncent
iver ece
ivable
LEAS
ELI
ABI
LIT
Y

*I
fthel
easepayment
sareinadvanc
e:usePres
entValueofanAnnui t
yDue
*I
fthel
easepayment
sareattheendoftheperi
od:usePres
entValueofanOr
dinar
yAnnui
ty
*f
orPur
chaseOpti
onandResi
dualValueGuar
antee:usePr
esentValueof1

DEPOS
ITSPAI
D–pre
payment
sr e
duceLeaseLi
abi
li
ty
- Happe
nswheni
nit
ialpayment
saredif
fere
ntf
rom annualr
ent
als

Le
as eLi
abi
li
ty x
x
Cash x
x

S
ubs
eque
ntMe
asur
eme
nt:

De
pr e
ciat
ionEx
pens
e x
x
Ri
ghtofUseAss
et x
x

- Depreciat
ether i
ghtofus eass etfrom thecomme ncementdatetothee arl
ieroftheUs e
fulLi
feofthe
assetandleaset ermi ft
heas setwillnotbet ransfer
redtotheles
see.
- Iftheowne rshipoft heunderlyingas setwil
lbet ransfer
redtotheless
eeort he
reisapur c
haseopt
ion
whicht hele
ss eeisexpect
edt oe xe
rc i
se,thende prec
iateove
rtheus e
fullif
eoft heasse
t.
- Ifassetisani nvest
me ntpropertythatus esther e
valuati
onmode l
,usether eval
uati
onmode l
.

Tot
alPayments
(Pr
esentValueoft
otalpayme
nts
)
DIS
COUNT *

*Amor
tiz
edus
ingt
hee
ffe
cti
vei
nte
res
tme
thodandr ecogniz
edasint
eres
tex
pens
e
Int
erestExpense x
x
LeaseLiabil
it
y x
x
Cash x
x

Le
aseLi
abi
li
ty–l
eas
epayme
nt+i
nte
res
tex
pens
e=Car
ryi
ngAmountofLe
aseLi
abi
li
ty

I
nte
res
tPayme
nt
 LEASES|4

(I
nter
estEx
pense)
REDUCTI
ONI NLEASELI
ABI
LIT
Y*

*I
fwi
thi
n12mont
hs,c
las
sif
yasac
urr
entl
iabi
li
ty,ot
her
wis
eanon-
cur
rentl
iabi
li
ty

PRES
ENT
ATI
ONI
NTHEFI
NANCI
ALS
TAT
EMENT

RIGHTOFUSEASS
ET–Noncurr
entAsse
t
LEASELI
ABI
LIT
Y–s e
par
ateCurre
ntandNonc
urr
entLi
abi
li
ty

S
ALESANDLEAS
EBACKT
RANS
ACT
IONS

- S
aleofanas
setandt
hes
ubs
eque
ntl
eas
ingofi
tbyt
heor
igi
nalowne
r

- I
fsat
isf
iesI
FRS1
6ass
ale
s,ac
count
edass
ale
sandl
eas
ebac
k

- I
fnot
,ac
count
edasaf
inanc
ing

I
fsat
isf
iesI
FRS1
6ass
ale
s,ac
count
edass
ale
sandl
eas
ebac
k

Cash(from Sale
s@FV) x
x
RightofUs eAsset x
x
Assetsold@ CA x
x
LeaseLiabil
it
y@ PV x
x
GainonRi ghtsTr
ans
fer
red x
x

- RI
GHTOFUS
EAS
SET
:Car
ryi
ngAmountoft
heAs
setx(
PVofLe
asePayme
nt/FVofAs
set
)

- Gai
n/Los
sonT
rans
fer
:CAofAs
set–FVofAs
set=Gai
norLos
sonS
aleofAs
set

- Ri
ght
sRe
tai
ned:Gai
n/Los
sonS
ale
sx(
PVofLe
asePayme
nt/
FVofAs
set
)

- Gai
n/Los
sont
heRi
ght
sTr
ans
fer
red:Gai
n/Los
sonS
ale–Ri
ght
sRe
tai
ned

I
fnot
,ac
count
edasaf
inanc
ele
ase

S
ELLER/
LES
SEE:r
ecor
dsFi
nanc
ialLi
abi
li
ty

BUYER/
LES
SOR:r
ecor
dsf
inanc
ialAs
set

T
HEORI
ES:

1
.Ther
ightofus
eas
seti
sre
por
tedas

A.Nonc
urr
entass
epar
atel
inei
tem C.I
ntangi
bleas
set

B.Pr
ope
rty,Pl
antandEqui
pme
nt D.I
nve
stme
ntpr
ope
rty

2. Whati
sthei
nte
res
trat
eus
edwhe
nthei
mpl
ici
tint
ere
str
atec
annotbede
ter
mine
d?

A.T
hepr
imer
ate C.T
hel
ess
ee’
save
ragebor
rowi
ngr
ate
 LEASES|5

B.T
hel
ess
or’
spubl
is
hedr
ate D.T
hel
ess
ee’
sinc
reme
ntalbor
rowi
ngr
ate

3.Whi
chs
tat
eme
ntc
onc
erni
ngr
esi
dualval
ueguar
ant
eei
sappr
opr
iat
efort
hel
ess
ee?

A.T
heas
setandr
elat
edl
iabi
li
tys
houl
dbei
ncr
eas
edbyt
heabs
olut
eamountoft
her
esi
dualval
ue

B.T
heas
setandr
elat
edl
iabi
li
tys
houl
dbede
cre
ase
dbyt
heabs
olut
eamountoft
her
esi
dualval
ue

C. T
heas
setandr
elat
edl
iabi
li
tys
houl
dbede
cre
ase
dbyt
hepr
ese
ntval
ueoft
her
esi
dualval
ue

D.T
heas
setandr
elat
edl
iabi
li
tys
houl
dbei
ncr
eas
edbyt
hepr
ese
ntval
ueoft
her
esi
dualval
ue

4. I
fther
esi
dualval
ueofanunde
rlyi
ngas
seti
sgr
eat
ert
hant
heamountguar
ant
eedbyt
hel
ess
ee

A.T
hel
ess
orpayst
hel
ess
eef
ort
hedi
ffe
renc
e

B.T
hel
ess
eer
ecogni
zesagai
natt
hee
ndoft
hel
eas
ete
rm

C. T
hel
ess
eehasnoobl
igat
ionr
elat
edt
other
esi
dualval
ue

D.T
hel
ess
eepayst
hel
ess
ort
othedi
ffe
renc
e

5.Ales
seewit
haleas
econt
aini
ngapur c
has
eopt
iont
hati
sre
asonabl
yce
rtai
ntobee
xer
cis
eds
houl
d
de
preci
atet
her
ightofus
eassetove
r

A.Us
efull
if
eoft
heas
set C.ULoft
heas
setorLT
,whi
che
veri
sshor
ter

B.Le
aseT
erm D.oft
heas
setorLT
,whi
che
veri
slonge
r

6.I
ncomput
ingde
pre
ciat
ionofr
ightofus
eas
set
,thel
ess
ees
houl
dsubt
rac
t

A.Aguar
ant
eedr
esi
dualval
ueandde
pre
ciat
eove
rthet
erm oft
hel
eas
e

B.Anunguar
ant
eedr
esi
dualval
ueandde
pre
ciat
eove
rthet
erm oft
hel
eas
e

C. Aguar
ant
eedr
esi
dualval
ueandde
pre
ciat
eove
rthel
if
eoft
heas
set

D.Anunguar
ant
eedr
esi
dualval
ueandde
pre
ciat
eove
rthel
if
eoft
heas
set

7
. Whi
chi
scor
rec
tst
ate
mentofl
eas
ecapi
tal
izat
ionont
hepar
toft
hel
ess
or?

A.T
hel
eas
etr
ans
fer
sowne
rshi
poft
hepr
ope
rtyt
othel
ess
or

B.T
hel
eas
econt
ainsapur
chas
eopt
ion

C. T
hel
eas
ete
rmi
sequalt
oormor
ethan7
5% oft
hee
conomi
cli
feoft
hel
eas
edpr
ope
rty

D.T
hemini
mum leas
epayme
ntse
xcl
udi
nge
xec
utor
ycos
tse
qualore
xce
ed90% oft
hef
airval
ueoft
he
l
eas
edprope
rty
 LEASES|6

8. T
hei
nte
restr
atei
mpli
citi
ntheleas
eisthedis
countr
atethatcause
stheaggregat
eoft
hepr
ese
ntval
ueof
t
hemi
nimum l
eas
epaymentsandtheunguar
anteedr
esi
dualvaluetoequalt
he

A.Fai
rval
ueoft
hel
eas
edas
set

B.Fai
rval
ueoft
hel
eas
edas
setandi
nit
ialdi
rec
tcos
tsoft
hel
ess
or

C. Fai
rval
ueoft
hel
eas
edas
setandi
nit
ialdi
rec
tcos
tsoft
hel
ess
ee

D.Gr
ossi
nve
stme
ntsi
nthel
eas
e

9.Le
asepayme
ntsunde
ranope
rat
ingl
eas
eshal
lber
ecogni
zedasr
enti
ncomeus
ingt
he

A.Cas
hme
thod

B.S
um ofye
ars
’di
git
sme
thod

C. De
cli
ningbal
anc
eme
thod

D.St
raightl
ineme
thod,unl
essanot
hers
yst
emat
icbas
isi
sre
pre
sent
ati
veoft
het
imepat
ter
noft
heus
ers
’
bene
f i
t

1
0.Ini
ti
aldirectcost
sincur
redbyt heles
sorunderas al
estypeleaseshouldbe
A.De ferr
edandal l
ocate
dove rtheeconomiclif
eoft heleasedpropert
y.
B.Ex pensedintheperi
odincurred.
C. Deferr
edandal l
ocate
dove rtheterm oft
hel easeinproporti
ontotherecognit
ionofre
ntalinc
ome
.
D.Adde dt ot hegrossinve
stme ntint heleaseand amor tiz
ed overthet er
m oft heleas
easayi e
ld
adjust
me nt
.

PROBLEMS
:

I
. AineeCompanyleas
edane quipmentf
rom Bat
inaCompanyonJ
anuar
y1,201
9unde
ral
eas
ewi
tht
he
fol
lowingper
tine
ntinf
ormation:

Annualr entalpayabl eattheendofeachyear 500,

000
Leaseterm 7years
Usef
ull i
feofe quipme nt 10years
Impli
citinterestrate 11%
PVofanor dinaryannui tyof1for7peri
odsat11% 4.71
Pres
entval ueof1f or7pe r
iodsat1
1% 0.48
Leaseprepayme nt 100,
000
Leaseincentiver e
ce i
ved 30,
000
Pres
entval ueofe xpe ct
edremovalcos
tincur
red 80,
000

Aine ehast heoptiontopurchaset hemac hi

neonJ anuary1 ,2026bypayi ngP400, 000 whichis
signifi
cantl
ylessthantheP600, 000e x pec
tedfairval
ueoft hemac hi
neont heoptionexerc
isedate
andi sexpecte
dt obere
asonableex e
rcis
e d.OnJanuary1,201
9,Ai ne
eincurr
edini
tialdir
ectcost
s
ofP50, 000.Aineeusesthestraight-
lineme t
hodofde prec
iationforalli
tsasse
t swithnoe xpe
cte
d
residualval
ue.
 LEASES|7

1
. Whatisthecostoft
hemac
hine
ryatt
hei
nce
pti
onoftheleas
e?
a.2,547,
000 c.2,
747,
000
b. 2,
355,000 d.2,
643,000

2. Whatisthebal
anc
eoft
hel
eas
eli
abi
li
tyonDe
ce mber31
,2019?
a.2,
547,
000 c.2,
047,
000
b.2,
327,
170 d.2,
549,
170

3.Whatist hec
urr
entpor
tionoft
hisl
eas
eli
abi
li
tyonDecembe
r31
,201
9?
a.500, 000 c.244,
011
b. 21
9,830 d.255,
989

4. Whatisthede
pre
ciat
ione
xpe
nsef
or201
9as
sumi
ngnor e
sidualval
ue?
a.254,7
00 c.363,
857
b. 27
4,700 d.392,
428

I
I. S
itt
iCompanyl e
asede quipme ntforit
se nt
ireni
ne-yearus efulli
fe,agr
eei
ngtopayP1 ,
000,000at
t
hes t
artoft heleaset erm onJ anuary1,2019,andP1 ,000, 000annuall
yone ac
hJ anuary1,for
t
hene xteightyear s
.T hepr e
s e
ntvalueonJ anuary1 ,201 9,oft heni
neleas
epayme ntsoverthe
l
easeterm,us i
ngt herateimpl ici
tintheleasewhi chSitt
iknowst obe10% wasP6,330,000.The
J
anuary1 ,2019,pr ese
ntval ueoft heleasepayme ntsusingS it
ti’
sinc
rement
alborr
owi ngrateof
1
2% wasP5, 970,000.S it
timadeat i
me l
ysecondleasepayme nt
.

1
. Whatisthebalanc
eoft
hef
inanc
ele
asel
iabi
li
tyonDe c
e mber31
,201
9?
a.6,330,000 c.5,
330,000
b. 5,
970,000 d.4,970,
000

2. Whatisthe2020i
nte
res
tex
pens
e?
a.496,300 c.596,
300
b. 486,
300 d.547,
968

3.Whatamountshoul
dSi
ttir
epor
tasf
inanc
ele
asel
iabil
it
yinitsDe
cembe
r31
,2020s
tat
eme
ntof
fi
nanci
alpos
iti
on?
a.4,863,
000 c.5,
963,
000
b. 4,
963,
000 d.3,
863,
000

I
II
. OnJ anuary1,2019,Putl
iCompanyleasedt woaut omobil
esfore xec
uti
veuse.Theleas
er e
quir
es
Putl
itomakef iveannualpayment
sofP2, 000,000be ginni
ngJ anuary1,2019.Attheendofthe
le
aset erm atDecember31,2023,Put l
iguar ant
e esther es
idualvalueoft heautomobi
lesat
P500,000.Theinte
res
trateimpl
ici
tintheleaseis12% andpr e
sentvaluefac
torsareasf
oll
ows:

Foranannuityduewit
h5payme nt
s 4.
04
For an or dinar
y annuity with 5 3.
60
payments
Pres
entvalueof1for5pe
riods 1
.57

1
. Whatisthefi
nanc
ele
asel
iabi
li
tyi
mme
diat
elyaf
terthefirs
tr e
qui
redpayme
nt?
a.6,080,000 c.6,365,000
b. 5,
485,000 d.5,128,
800

2. Whati sthe2020i
nte
res
tex
pens
e?
a.7 63,800 c.969,
600
b. 615,456 d.729,
600
 LEASES|8

I
V. OnJ anuary1 ,201 9,Andreae nteredintoa6- yearle
asewi thal essor.Annualle as
epayme nt
sof
P900,000 i nc
ludingannuale xecutoryc ostofP1 00,000 arepayabl eatt heendofe achyear.
Andrea knowst hatthel e
s s
ore x pect
sa 1 0% r ateofr eturn on thelease .Andrea hasa 12%
inc
reme ntalborrowingrate.Thee quipme ntisexpect
edt ohaveane sti
matedus efulli
feof6year s
.
Inaddition,at hir
dpar t
yhasguar ant
e e
dt opayt helessorther e
sidualvalueofP200, 000att he
endoft helease.(roundoffpre s
entval uefactorsto2de ci
malplac es
)

1
. WhatisAndr
ea’
stot
all
eas
eli
abi
li
tyi
ntheJ
anuary1,2019st
ate
mentoff
inanc
ialpos
iti
on?
a.3,488,
000 c.4,
018,000
b. 3,
924,
000 d.3,
582,
000

2. Whatisthel
eas
eli
abi
li
tybal
anc
eonDe
cember31,2019?
a.3,140,
200 c.3,
036,800
b. 3,
416,
400 d.3,1
40,200

V. OnJ anuary1,201 9,Shei

khaCompanye ntere
di ntoa10- yearleasefordril
li
nge quipme nt.She
ikha
accountedfort heac quis
iti
on asaf inancel easeforP4, 900,000 whi c
hi ncluded aP200, 000
guarantee
dr e
sidualvalue( gr
ossamount )
.Att hee ndoft hele
as e
,theas s
etwi l
lreve r
tbac ktothe
le
ssor.Itise s
t i
mat e
dt hatt heasse
t’sfairval ueatt hee ndofi ts1 2ye arus efullif
ewi llbe
P100,000.Sheikhar e
gularl
yus est
hes t
raight-l
inedepre
c iat
ionons i
mi l
arequipme nt.

1
. Whatamounts
houl
dShe
ikhar
ecogni
zeasde
preciati
onexpenseont
hel
eas
edas
set
?
a.490,000 c.400,000
b. 47
0,000 d.408,333

2. Ifthetot
alamountc apit
ali
zedasanass
etwass ti
llP4,
900,000 butt
here
sidualval
ueof
P200,
000i sunguar
antee
d,whatist
hede
preciat
iontoberecor
dedin2019?
a.490,000 c.400,000
b. 47
0,000 d.408,333

VI
. OnJ anuary1,2019,Fati
maCompanys ignedane ight-yearnonc ancel
abl
eleaseforanewmac hi
ne
requi r
ingP900,000annualpayme ntsatt hebeginningofe achyear.Themac hi
nehasausefull
if
e
of1 0ye ars,wi
thnor esi
dualvalue
.Titl
epas se
st oFat i
maatt heleaseexpi
rati
ondate
.Fati
maus es
st
r aight-l
inedepr
eciat
ionforallofit
spl antasse
ts.Aggr egatele
as epaymentshaveapre
sentval
ue
onJ anuary1,2019ofP5, 600,000 bas edonanappr opriat
er ateofintere
st.Whatisthe2019
depr eci
ati
one x
pense?
a.7 00,000 c.47 0,000
b. 560,000 d.61 2,
500

VI
I. KayeCompanyl easedmac hiner
ywi t
haf airvalueofP4, 150,000from anotherentit
yonDe c
embe r
31,2019.T hec ontractisaf i
ve-ye
arnonc anc el
ablel e
asewi t
h an impl i
citi
nterestrateof1 0
percent
.Thel easer equir
e sannualpayme ntsofP1 ,000,000be gi
nningDe cember31 ,2019.Kaye
appropri
atelyaccount edf ortheleaseasaf inancel ease.Kaye’
sincreme nt
alborrowingratei s12
percent
.Thepr esentvalueofanannui tydueof1f or5ye arsat10percentis4.17
0andt hepresent
val
ueofanannui tydueof1f or5ye arsat12pe rcentis4.037.Whati stheleas
eliabil
it
yaf terthe
fi
rstpayme ntthatKayes houldreportonthes t
ateme ntoff i
nanci
alposit
ionatDe cember31,201 9?
a.3, 150,000 c.4,170,
000
b. 3,170,
000 d.3,037,000

VI
II
. Ale
shaCompanyisade al
eri
nmac hi ne
ry.OnJ
anuar
y1,201
9,mac
hine
rywasl
eas
edt
oanot
her
ent
erpr
isewi
ththef
oll
owingprovi
sions:

Annualr
entalpayabl
eatt
hee
ndofe
achye
ar 2,
000,000
Leas
eterm 5year
s
 LEASES|9

Usefulli
feofmac hiner
y 6years
Costofmac hine r
y 5,
000,000
Residualvalue-guar anteed 1,
000,000
Implici
tinterestrate 10%
PVofanor dinaryannui t
yof1f
or5pe
riodsat 3.7
9
10%
PVof1f or5pe riodsat10% 0.
62

Att hee ndoft hele

aseter
m onDece
mber31,2019,t
hemac hine
rywillberet
urne
dt oAle
sha.T
he
perpetualinve
ntorysys
temisus
ed.Al
eshai
ncurr
edini
tialdi
rec
tc os
tsofP200,
000i nfi
nal
izi
ngt
he
le
as eagreement.

1
. Whatisthetot
alf
inanc
ialr
eve
nuef
rom t
hel
eas
efrom thel
eas
etr
ans
act
ion?
a.2,800,000 c.1,
800,000
b. 3,
000,000 d.3,200,
000

2. Whatamountofpr
ofi
tont
hes
ales
houl
dAl
eshaCompanyre
por
t?
a.3,200,
000 c.3,
000,
000
b. 2,
000,
000 d.2,
500,
000

3.Whatamountofi
nte
res
tinc
omes
houl
dAl
eshaCompanyr
epor
tin201
9?
a.7 58,
000 c.820,
000
b. 555,
000 d.920,
000

4. Whatisthetot
ali
ncomet
ober
epor
tedbyAl
eshaf
rom thi
sleas
ein201
9?
a.3,000,000 c.2,
800,000
b. 3,
820,000 d.820,
000

I
X. Jovy Financi
ng Company l easese quipment t oc us t
ome rs under a dire
ctf i
nancing lease
arrangementforanonc ancel
ableperiodofatl e ast10ye ar s
.OnJ anuary1,2019,J
ovypur chase
d
ane quipmentforP8,300,000andi mme diat
elyl eas
e ditt oanothercompanyf or1
0ye ars.Lease
payme ntsofP1,
200,000ar etobec olle
ctedatt hebe ginningofeachye arandJovyexpec
tstoe ar
n
9% interes
tonl eases
.JovyincursP1 00,000ofi nit
ialdir e
ctcostrelati
ngtothelease
.T helease
transf
erstheowne r
shipoftheassettot heless
ee .

1
. Whatisthetot
alf
inanc
ialr
eve
nuet
obee
arne
dbyJovyinthi
sle
ase
?
a.3,000,000 c.2,
600,000
c. 3,
600,000 d.2,400,
000

2. Whatisthefi
nanc
ialr
eve
nuei
n201
9?
a.648,000 c
.756,
000
b. 1
,080,000 d.500,
000

3.Whati sthec arryi

ngamountoft hel
eas
er e
cei
vablet obepr e
sent
edi nJ ovy’sst
ate
mentof
fi
nanc i
alposit
iononJanuary1,201
9andDec
ember31,201 9?
a.1 2,000,000and1 0,800,
000 c.10,800,000and10,800, 000
b. 8,400,000and9, 156,
000 d.7,200,000and7 ,
848,000

X. KrizhiaCompanyi sint hebusines

sofl eas
ingnews ophist
icat
ede qui
pme nt
.Asal e
s s
or ,Kriz
hia
expectsa 1 2% re
turn on it
sne ti nve
stmentwith paymentsmadei n advance.Allle ase
sar e
cl
as si
fie
dasdi r
ectfinanci
ngleases.Attheendoftheleaseterm,theequi
pme nt’
sowne rshipisnot
tr
ans fer
re dtot
hel e
s s
ee.OnJ anuary1,2019,equi
pme ntislease
dt oal ess
eewi t
ht hef ol
lowing
i
nf ormation:
 LEASES|1
0

Costofe quipmenttoKoresh 5,
250,000
Residualvalue–unguar antee
d 600,000
Usefulli
feandl eas
ete r
m 8ye ar
s
Implici
tinteres
trate 12%
Presentval ueofan annui ty dueat1 2% f
or8 5.
564
peri
ods
Presentvalueof1at1 2% for8pe r
iods .
404

1
. Whatistheannualr
entpayabl
einadvance?
a.900,000 c.850,000
b. 1
,000,000 d.1,200,
000

2. Whatisthetotalf
inanc
ialr
eve
nuef
rom t
hedire
c tf
inanc
ingl
eas
etr
ans
act
ion?
a.2,550,000 c.1,
550,000
b. 1
,950,000 d.1,
200,000

XI
. Anenti
tyi
sade al
erinequi
pmentandusesl
ease
st of
aci
li
tat
ethesal
eofit
sproduct.Thee
nti
ty
ex
pect
sa12% r
eturn.Att
heendofthel
eas
eterm,thee
qui
pmentwil
lre
ver
ttothele
ssor.

OnJ
anuar
y1,201
6,ane
qui
pme
nti
sle
ase
dtoal
ess
eewi
tht
hef
oll
owi
ngi
nfor
mat
ion:

Costofe qui
pme nttothee nt
ity 3,
500,000
Fairvalueofe qui pment 5,
500,000
Residualvalue–unguar anteed 600,000
Ini
tialdirec
tc ost 200,000
Annualr entalpayableinadvanc e 900,000
Usefulli
feandl easeter
m 8ye ars
Implici
tinterestrate 12%
PVof1at1 2% f or8pe ri
ods 0.40
PVofanor dinar yannuityof1at1 2% f
or8periods 4.97
PVofanannui t
ydueof1at1 2% f
or8pe r
iods 5. 56
Fir
stleasepayme nt J
anuar
y1 ,201 6

1
. Whatisthegros
sinve
stme
nti
nthel
eas
e?
a.7,800,000 c.6,
600,
000
b. 7
,200,000 d.6,
900,
000

2. Whatistheneti
nve
stme
nti
nthel
eas
e?
a.5,004,000 c.5,
500,
000
b. 5,
244,000 d.5,
740,
000

3.Whatisthet
otalf
inanc
ialr
eve
nue
?
a.2,196,
000 c.2,
556,
000
b. 2,
796,
000 d.1,
956,
000

4. Whatamountshoul
dber
ecogni
zedasi
nte
res
tinc
omef
or2016?
a.600, 480 c.536,
760
b. 492,
480 d.521,
280

5.Whatamountofc
ostofgoodss
olds
houl
dber
ec ogni
zedinr
ecor
dingt
hel
eas
e?
a.3,260,
000 b.3,500,
000
b. 3,
740,
000 d.3,460,
000