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    Date Payment Interest Principal Present Value: Table of Amortization

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    Jekoe
    This document summarizes the accounting entries for an operating lease of a building. It shows: 1) The original 20-year lease term with annual payments of $600,000 and an implicit interest rate of 9%. 2) The calculation of the present value of the lease liability on the commencement date of January 1, 2020. 3) Journal entries made on January 1, 2020 to record the right-of-use asset and lease liability. 4) The extension of the lease term by 5 years and remeasurement of the lease liability on January 1, 2023 using a new implicit interest rate of 12%. 5) Journal entries made on January 1, 2023 and December

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    Date Payment Interest Principal Present Value: Table of Amortization

    Uploaded by

    Jekoe
    84 views6 pages
    This document summarizes the accounting entries for an operating lease of a building. It shows: 1) The original 20-year lease term with annual payments of $600,000 and an implicit interest rate of 9%. 2) The calculation of the present value of the lease liability on the commencement date of January 1, 2020. 3) Journal entries made on January 1, 2020 to record the right-of-use asset and lease liability. 4) The extension of the lease term by 5 years and remeasurement of the lease liability on January 1, 2023 using a new implicit interest rate of 12%. 5) Journal entries made on January 1, 2023 and December

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    Cavalier Company

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    This document summarizes the accounting entries for an operating lease of a building. It shows: 1) The original 20-year lease term with annual payments of $600,000 and an implicit interest rate of 9%. 2) The calculation of the present value of the lease liability on the commencement date of January 1, 2020. 3) Journal entries made on January 1, 2020 to record the right-of-use asset and lease liability. 4) The extension of the lease term by 5 years and remeasurement of the lease liability on January 1, 2023 using a new implicit interest rate of 12%. 5) Journal entries made on January 1, 2023 and December

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    84 views6 pages

    Date Payment Interest Principal Present Value: Table of Amortization

    Uploaded by

    Jekoe
    This document summarizes the accounting entries for an operating lease of a building. It shows: 1) The original 20-year lease term with annual payments of $600,000 and an implicit interest rate of 9%. 2) The calculation of the present value of the lease liability on the commencement date of January 1, 2020. 3) Journal entries made on January 1, 2020 to record the right-of-use asset and lease liability. 4) The extension of the lease term by 5 years and remeasurement of the lease liability on January 1, 2023 using a new implicit interest rate of 12%. 5) Journal entries made on January 1, 2023 and December

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    Commencement Date: Jan.

    1, 2020 Estimated life of the building (years) 20


    Annual Payment payable
    Implicit Interest Rate:
    at the end of each year: 600,000 9%
    PV of an ordinary annuity of 1 at 9% for
    Lease term (years) 5 5 periods: 3.89

    TABLE OF AMORTIZATION
    Date Payment Interest Principal Present Value
    1/1/2020 2,334,000
    12/31/2020 600,000 210,060 389,940 1,944,060
    12/31/2021 600,000 174,965 425,035 1,519,025
    12/31/2022 600,000 136,712 463,288 1,055,737
    Journal Entries for 2020

    DATE ACCOUNT TITLE Debit Credit


    1-Jan-20 Right of Use Asset 2,334,000
    Lease Liability 2,334,000

    31-Dec-20 Interest Expense 210,060


    Lease Liability 389,940
    Cash 600,000

    31-Dec-20 Depreciation 466,800


    Accumulated Depreciation 466,800
    Remeasurement of Lease Liability
    On January 1, 2023, the lease liability is remeasured using the new interest implicit interest rate of 9%.
    Annual rent for remaining 2 years of old lease term
    Multiplied by PV of an ordinary annuity of 1 at 9% for 2 periods
    Present Value - January 1, 2023

    Annual rental for 5 years starting January 1, 2025


    Multiplied by PV of an ordinary annuity for 5 periods
    Present Value - January 1, 2025
    Multiplied by PV of 1 at 12% for 2 periods
    Present Value - January 1, 2025

    The present value of the new rentals on January 1, 2026 is rediscounted for 2 periods on the date of
    extension on January 1, 2023
    Present value of remaining rentals of old lease term ₱ 1,014,000
    Present value of rentals of extended lease term
    Total present value - January 1, 2023
    Present value - December 31, 2022
    Increase in lease liability on January 1, 2023

    Right of use asset - January 1, 2020 ₱ 2,334,000


    Accumulated depreciation - December 31, 2022
    Carrying amount - December 31, 2022 ₱ 933,600
    Increase in lease liability on January 1, 2023
    New carrying amount
    plicit interest rate of 9%.
    ₱ 600,000
    1.69
    ₱ 1,014,000

    ₱ 800,000
    3.605
    ₱ 2,884,000
    0.797
    ₱ 2,298,548

    periods on the date of

    ₱ 1,014,000
    2,298,548
    ₱ 3,312,548
    1,055,737
    ₱ 2,256,811

    ₱ 2,334,000
    1,400,000
    ₱ 933,600
    2,256,811
    ₱ 3,190,411
    New Annual Payment
    payable at the end of each 800,000 PV of 1 at 12% for 2 periods: 0.797
    year:
    PV of an ordinary annuity of 1 at
    Implicit Interest Rate: 12% 1.69
    12% for 2 periods:
    PV of an ordinary annuity of 1
    3.605
    at 12% for 5 periods:

    TABLE OF AMORTIZATION
    Date Payment Interest Principal Present Value
    1/1/2023 3,312,548
    12/31/2023 600,000 397,506 202,494 3,110,054
    12/31/2024 600,000 373,206 226,794 2,883,260
    12/31/2025 600,000 345,991 454,009 2,429,251
    12/31/2026 600,000 291,510 508,490 1,920,761
    12/31/2027 600,000 230,491 569,509 1,365,252
    12/31/2028 600,000 162,150 637,850 713,402
    12/31/2029 600,000 86,598 713,402 -
    Journal Entries for 2023

    DATE ACCOUNT TITLE Debit Credit


    1-Jan-23 Right of Use Asset 2,256,811
    Lease Liability 2,256,811

    31-Dec-23 Interest Expense 397,506


    Lease Liability 202,494
    Cash 600,000

    31-Dec-23 Depreciation 455,773


    Accumulated Depreciation 455,773

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