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How much is the initial cost of the right of use asset

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Reference no: EM133119675

Question - On January 1, 2021, South Africa Company leased a building with the following information:

Annual fixed payment in advance at the beginning of each lease year P1,000,000

The Initial direct cost paid P350,000

Lease incentive received P150,000

Lease bonus paid to the lessor before commencing of lease P100,000

Discounted amount of restoring the building as required by the contract P200,000

The Lease term is 5 years.

The Useful life of the building is 8 years.

The implicit interest rate of 8%

The entity used 2 decimal places for the PVF.

Required -

1. How much is the initial lease liability?

2. How much is the initial cost of the right of use asset?

3. How much is the annual depreciation?

4. Prepare an amortization table (focus on Year 1 only)

5. What are the related journal entries (Year 1 only)?

Reference no: EM133119675

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