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What is the new lease liability on January

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Question - Denver Corp. entered into a lease of building on January 1, 2020 with the following information:

Annual rental payable at the end of each year P120,000

Lease term 5 years Useful life of building 20 years

Interest rate implicit in the lease 9%

The lease contained an option for the lessee to extend the lease for a further 5 years.

At the commencement date, the exercise of the extension option is not reasonably certain. On January 1, 2023, the lessee decided to extend the lease for a further 5 years.

New annual rental payable at the end of each year P160,000.

New implicit interest rate 12%, 23.

Required -

1. What is the new lease liability on January 1, 2023?

2. What is the carrying amount of right to usage of building on January 1, 2023?

3. What is the depreciation expense for 2023?

Reference no: EM132768593

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