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Scenario 2: Residual value guarantee 4. The lease payments are due at the end of each year. Sunset Co. guarantees that April, Inc. will realize P80,000 from selling the machine to another party at the end of the lease term. At contract inception, Sunset Co. estimates that the fair value less disposal costs of the machine at the end of the lease term, when the machine is reverted back to April, Inc., will be P50,000. How much are the carrying amounts of the (1) right- of-use asset and (2) lease liability on December 31, 20x1? a. 1,116,431; 1,164,527 c. 1,141,781; 1,080,980 b. 1,044,431; 1,164,527 d. 1,121,431; 1,080,980 5. (Continuation of Scenario 211 PROBLEM 4: MULTIPLE CHOICE - COMPUTATIONAL Fact pattern for the nine (9) independent scenarios below: On January 1, 20x1, Sunset Co. leased a machine from April, Inc. Information on the lease is as follows: Annual rent P200,000 Lease term Useful life of machine Implicit interest rate 10% Lessee's incremental borrowing rate 11% 10 years 12 years Scenario 1: Rent due at beg. of year vs. Rent due at end. of year 1. How much are the carrying amounts of the right-of-use asset and lease liability on December 31, 20x1, if the rentals are due (1) at the beginning of each lease year and (2) at the end of each lease year? Rent due at beginning Rent due at end Right-of-use asset Lease liability Right-of-use asset Lease liability 1,266,986 1,216,625 1,151,804 1,106,022 b. 1,106,022 1,151,804 1,216,625 1,266,986 1,216,625 1,266,986 1,106,022 1,151,804 d. 1,151,804 1,106,022 1,266,986 1,216,625 a. C. 2. (Continuation of Scenario 1) The machine reverts back to April, Inc. at the end of the lease term. Sunset Co. uses the straight line method of depreciation. How much are the lease-related expenses recognized in 20x2, if the rentals are due (1) at the