Reference no: EM132912726

The noncurrent liabilities of PRANPRIYA INC. at December 31, 2020, included the following:

Note Payable, Bank 3,600,000

Note Payable, Supplier 1,500,000

Lease Liability 2,623, 200

Transactions during 2021 and other information relating to PRANPRIYA's liabilities were as follows:

a. The note payable to the bank bears interest at 20% and is dated May 1, 2020. The principal amount of P3,600,000 is payable in four equal annual installments of P900,000 beginning May 1, 2021. The first principal and interest payment were made on May 1, 2021.

b. The lease is for a 10-year period. Equal annual payments of P750,000 are due on December 31, of each year. The interest rate implicit in the lease is 18%. The amount of P2,623,200 represents the present value of the six remaining lease payments (due December 31, 2021, through December 31, 2026) discounted at 18%.

c. The 3-year note payable to supplier bears interest at 19% and matures on September 30, 2022. On February 25, 2022, after the end of the reporting period, but before the financial statements were authorized for issue, PRANPRIYA consummated a noncancelable agreement with a lender to refinance the 19% P1,500,000 on a long- term basis, on readily determinable terms that have not yet been implemented. Both parties are financially capable of honoring the agreement, and there have been no violations of the agreement's provisions.

d. On April 1, 2021, PRANPRIYA issued for P7,005,675, P6,000,000 face amount of its 20%, P100,000 bonds. The bonds were issued to yield 15%. The bonds are dated April 1, 2021, mature on April 1, 2026. Interest is payable annually on April 1.

Problem a: Based on the above, determine the following:

1. Lease Liability as of December 31, 2021

2. Carrying amount of bonds payable as of December 31, 2021

3. Total noncurrent liabilities as of December 31, 2021

4. Current portion of long-term liabilities as of December 31, 2021