1. On September 1, 2021, AYE Company entered into one-year nonrenewable lease, commencing on that date, for an office space and made the following payments to XYZ Properties:
• Bonus to obtain lease - ₱ 120,000
• First month’s rent - ₱ 40,000
• Last month’s rent - ₱ 40,000
The lease is considered “Short-term lease” in its income statement for the year ended Dec. 31, 2021.

• What amount should AYE report as rent expense for the year ended, December 31, 2021?

2. On January 1, 2021, BEE Corporation signed a 3-year operating lease for various office furniture and equipment at ₱300,000 per year. The lease included a provision for additional rent of 5% of annual company sales in excess of ₱2,000,000. BEE’s sales for the year ended Dec. 31, 2021 were ₱2,500,000. Upon execution of the lease, BEE Corporation paid ₱100,000 as a bonus for the lease

• What is BEE’s rent expense for the year ended December 31, 2021 if the lease is considered a “Low value lease”?

3. As an inducement to enter a lease, CEE Company, a lessor, grants ABC Management Corporation, a leaseholder, nine months of free rent under a two-year operating lease for its office furniture and equipment. The lease is effective on Feb. 1, 2021 and provides for monthly rental of ₱30,000 to begin November 1, 2021.

• If the lease is considered “Low value lease”, what amount of accrued rent should CEE Company report in its December 31, 2021 statement of financial position?
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• 4: On September 1, 2021, DHI Sound System Company leased office furniture and equipment at a monthly rental of P40,000 for 3 years expiring August 31, 2024. As an inducement for DHI to enter into lease, the lessor permitted DHI to use the asset rent-free from September 1 to November 30, 2021. 
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• For the year ended December 31, 2021, how much TOTAL expense should DHI record related to the leased asset?

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