On January 2, 2019, Chats leased an office space for an annual rental of P600,000 payable every yearend. The lease term is for five years and Chats has the option to extend the lease for another three years. The same annual rent shall be payable if the option is exercised, however, Chats did not signify to exercise said option in 2019. The implicit interest rate on the lease is 12%. On January 1, 2021, Chats decided to extend the lease when the implicit interest rate is 10%. 1. How much is interest expense for 2021? 2. How much is the depreciation expense for 2021? 3. How much is the carrying amount of the lease liability as of yearend 2021?
On January 2, 2019, Chats leased an office space for an annual rental of P600,000 payable every yearend. The lease term is for five years and Chats has the option to extend the lease for another three years. The same annual rent shall be payable if the option is exercised, however, Chats did not signify to exercise said option in 2019. The implicit interest rate on the lease is 12%. On January 1, 2021, Chats decided to extend the lease when the implicit interest rate is 10%. 1. How much is interest expense for 2021? 2. How much is the depreciation expense for 2021? 3. How much is the carrying amount of the lease liability as of yearend 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 2, 2019, Chats leased an office space for an annual rental of P600,000 payable every yearend. The lease term is for five years and Chats has the option to extend the lease for another three years. The same annual rent shall be payable if the option is exercised, however, Chats did not signify to exercise said option in 2019. The implicit interest rate on the lease is 12%. On January 1, 2021, Chats decided to extend the lease when the implicit interest rate is 10%.
1. How much is interest expense for 2021?
2. How much is the
3. How much is the carrying amount of the lease liability as of yearend 2021?
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