Interest rate implicit on the lease is 12 %. 20 At what amount should Prince of Wales record the building at July 1, 2019 ? 21 What is the annual depreciation of the building ? 22 . Prepare the entries in the books of Prince of Wales to record the foregoing for the years 2010 and 2020 . The company adopts the calendar year as its reporting period . Problem 6 Jackie Chan Leasing signs an equipment lease contract with Chris Tucker on January 1, 2015 The following information pertains to the lease Lease term 5 years Equipment's useful life 6 years Bargain option p P40,000 Implicit rate , known by Chris Tucker 10% Fair value of the asset at January 1, 2015 P600,000 Estimated recoverable value at the end of 5 years P80,000 Estimated residual value at the end of 6 years P20,000 The cost of the asset to Jackie Chan Leasing is P600,000 . Chris Tucker uses the sum -of-the year's digit method to depreciate this type of equipment . Annual lease payments are made at the beginning of each year , starting January 1, 2015 23 Give the entries in the books of Chris Tucker for years 2015 and 2016 as a result of the lease contract 24 Give the entries in the books of Jackie Chan Leasing for 2015 and 2016. Problem 7 On April 1, 2015 , Ben Ten Company leased equipment to Ironman Corporation . The following information pertain to this lease The term of non -cancelable lease is 8 years with no renewal option . The annual payment is P80,000 ; first payment is due April 1, 2015 Estimated useful life of the equipment is 10 years . The cash price of the equipment is P539.730 at April 1, 2025 , which is the same as the carrying value of the asset in the books of Ben Ten The residual value at the end of the lease term , which is guaranteed by Ironman , is P80,000 Both Ben Ten and Ironman use the calendar year as the reporting period