Problem 3 Riza , Inc . leased an equipment form Joey Company on December 31,2019 . The equipment has a fair value of P1,011,840 at this date . Annual lease payments are P135,000 and are payable each December 31 . The first payment was made on December 31, 2019 . At the end of the 12 year - lease term , title to the equipment will pass to Riza , Inc . the equipment has an estimated residual value of P40,000 at the end of the 15 -year useful life . 9 What is the lessor's implicit interest rate in this lease ? 10 Prepare a partial amortization table for the first three years of the lease term . 11 How much depreciation will be taken up by Riza for the year 2019 ? 12 Prepare the entries in the books of Riza for the year 2019 and 2020 13 How much of the lease liability on December 31,2019 will be classified as current liabilities and non -current liabilities ? Problem On January 1, 2019 , Shirley Corporation leased a machinery form Joel Company on a five -year lease term at P150,000 annual rental payments , paid in advance . There is a bargain purchase option on December 31, 2023 of P240,000 . The economic life of the equipment is 15 years . The interest rate implicit in this lease , which is known to Shirley is 12%. 14 At what amount should the asset be recorded on January 1, 2019 ? 15 Prepare an amortization for the entire term of the lease 16 . How much depreciation will be taken up by Shirley for the year 2019 ? 17 Prepare the entries in the books of Shirley to record the foregoing for the years 2019 and 2020 18 . Assume at the end of the lease term , Shirley exercised its purchase option . Give the entry for the exercise 19 Give the journal entry at the end of the lease term assuming that Shirley failed o exercise its bargain purchase option Problem 5 On July 1, 2019 , The Prince of Wales , Inc . signs a 10-year non -cancellable lease agreement for a storage building owned by Colony , Inc . The following information pertains to the lease agreement Annual rental payment is P750,000 beginning on July 1, 2019 . This rental includes P50,000 for taxes and insurance The fair value of the building on July 1, 2019 is P4,478,000 The building has an estimated economic life of 12 years . Unguaranteed residual value at the end of 10 years is P150,000