What are carrying amounts of right use assets on December

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Question - On January 1, 2020, Millennial Corp entered into a 4-year lease of property with annual lease payments of P50,000, payable at the end of each year. The contract states that lease payments will increase after two years based on the increase in the Consumer Price Index (CPI) in the preceding 2 years. The rate implicit in the lease is not readily determinable. The implicit rate of the lease is 12% but Millennial Corp.'s incremental borrowing rate is 10%. Millennial uses straight-line depreciation with an estimated useful life of 5 years. In addition, the contract requires Millennial to make an additional payment of 5% of excess sales over P2,000,000. Millennial expects its annual sales in the next 4 years to exceed P2,000,000 by P100,000.

The CPIs are as follows:

January 1, 2020- 250

January 1, 2022- 350

Required - What are the carrying amounts of right use assets on December 31, 2022?

a. 75,333

b. 46,714

c. 72,013

d. 46,417

Reference no: EM132934289

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