How much is the initial lease liability

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Reference no: EM132772025

At the beginning of the current year, MJ Company sold a building with remaining useful life of 30 years and immediately leased it back for 5 years. Sale price at below fair value was P18,000,000. Fair value of the building is 20,000,000. Carrying amount of the building is P24,000,000 with annual rental payable at the end of each year at P1,000,000. Implicit rate is 12% and PV of an ordinary annuity of 1 at 12% for 5 periods is 3.60.

Problem 1: How much is the initial lease liability?

Problem 2: Using MJ data, how much is the cost of right of use asset?

Problem 3: Based on MJ data, how much is the loss on right transferred?

Problem 4: Based on MJ information, what is the interest expense of the seller-lessee for the current year?

Reference no: EM132772025

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