On January 1, 2020, ABC Company enters into a 4-year lease of office equipment. The rent in 2020 is P10,000 an shall increase by 10% annually starting on January 1,2022. Rentals are payable at the end of each year. ABC Co. pays the lessor a lease bonus of P5,000 on January 1, 2021. ABC Co. opts to use the practical expedient allowed under PFRS 16 for leases of low value assets. How much is the lease expense in 2021?

On January 1, 2020, ABC Company enters into a 4-year lease of office equipment. The rent in 2020 is P10,000 an shall increase by 10% annually starting on January 1,2022. Rentals are payable at the end of each year. ABC Co. pays the lessor a lease bonus of P5,000 on January 1, 2021. ABC Co. opts to use the practical expedient allowed under PFRS 16 for leases of low value assets. How much is the lease expense in 2021?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2020, ABC Company enters into a 4-year lease of office equipment. The rent in 2020 is P10,000 an shall increase by 10% annually starting
on January 1,2022. Rentals are payable at the end of each year. ABC Co. pays the lessor a lease bonus of P5,000 on January 1, 2021. ABC Co. opts to
use the practical expedient allowed under PFRS 16 for leases of low value assets. How much is the lease expense in 2021?

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