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Leases SolMan

The document contains 13 illustrations calculating lease accounting entries such as initial lease liability, cost of right to use asset, depreciation, interest expense, principal, and carrying amount for various lease scenarios. It provides the calculations and journal entries for recording different types of leases like sales-type, direct financing, and operating leases over the lease term.

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Elaine Joyce Garcia
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72 views15 pages

Leases SolMan

The document contains 13 illustrations calculating lease accounting entries such as initial lease liability, cost of right to use asset, depreciation, interest expense, principal, and carrying amount for various lease scenarios. It provides the calculations and journal entries for recording different types of leases like sales-type, direct financing, and operating leases over the lease term.

Uploaded by

Elaine Joyce Garcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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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

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