Question: Help please... :( Problem 2: On January 1, 2020, OLIGARCH Company entered into a 5-year lease of a machinery with the following terms: Annual rental

Help please... :(

Problem 2: On January 1, 2020, OLIGARCH Company entered into a 5-year lease of a machinery with the following terms:

Annual rental for the first two years payable at the end of each year P100,000

Annual rental for the next three years payable at the end of each year P200,000

Initial direct cost paid by lessee P50,000

Present Value of restoration cost required by contract P30,000

Useful life of machinery 10 years

Implicit interest rate 8%

Use at least 4 decimal places to get the PV factor to be used.

Required:

  1. Compute the lease liability on January 1, 2020.
  2. Compute the cost of right of use asset.
  3. Compute the depreciation for 2020.
  4. Prepare a table of amortization.
  5. Prepare journal entries for 2020.
  6. Prepare the journal entry on December 31, 2022.

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