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Prepare journal entries on the books of veronica company

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Question - On Jan 1, 2020, Veronica Company negotiated a 15-year lease fora building. The building has useful life of 20 years.

Before occupancy, the lessee incurred leasehold improvement of Php600,000 with useful life of 5 years.

The lessee is required to restore the building upon expiration of the lease. The estimated cost of restoration is Php644,000.

Annual payments of Php1,000,000 are payable to the lessor on Dec 31 of each of the 15 years of the lease term. The lease was negotiated to assure the lessor a 10% rate of return.

PV of an ordinary annuity of 1 at 10% for 1.5 periods 7.606

PV of an annuity of 1 in advance at 10% for 15 periods 8.367

Required - Prepare journal entries on the books of Veronica Company for 2020?

Reference no: EM133141515

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