On January 1, 2019, Zendaya Corp. signed a five-year non-cancelable lease for machine with Cassie Company. The terms of the lease called for Zendaya to make annual payments of P86,680 at the beginning of each year starting January 1, 2019. The machine has an estimated useful life of 6 years and a P50,000 unguaranteed residual value at the end of the five year lease term. The machine reverts to the lessor at the end of five-year lease term. Zendaya uses straight-line method of depreciation for all of its fixed assets. The implicit rate of the contract which is known by Zendaya is 10%. The fair value of the machine on January 1, 2019 is P392,490. Zendaya incurred P10,000 to install the machine. Zendaya has an obligation to restore the machine to a condition suitable for use at the end of the lease term. Estimated cost of restoration is P20,000. (Use four decimal places for the PV factor) Applying IFRS 16, how much is the current and the non-current portion of the liability to be presented on December 31, 2019? A. Current P59, 203.30 Non Current P215, 563.70 B. Current P86, 680.00 Non Current P215, 563.70 C. Current P86, 680.00 Non Current P229, 221.70 D. Current P103, 755.30 Non Current P234, 346.20
On January 1, 2019, Zendaya Corp. signed a five-year non-cancelable lease for machine with Cassie Company. The terms of the lease called for Zendaya to make annual payments of P86,680 at the beginning of each year starting January 1, 2019. The machine has an estimated useful life of 6 years and a P50,000 unguaranteed residual value at the end of the five year lease term. The machine reverts to the lessor at the end of five-year lease term. Zendaya uses straight-line method of depreciation for all of its fixed assets. The implicit rate of the contract which is known by Zendaya is 10%. The fair value of the machine on January 1, 2019 is P392,490. Zendaya incurred P10,000 to install the machine. Zendaya has an obligation to restore the machine to a condition suitable for use at the end of the lease term. Estimated cost of restoration is P20,000. (Use four decimal places for the PV factor) Applying IFRS 16, how much is the current and the non-current portion of the liability to be presented on December 31, 2019?
A. Current P59, 203.30 Non Current P215, 563.70
B. Current P86, 680.00 Non Current P215, 563.70
C. Current P86, 680.00 Non Current P229, 221.70
D. Current P103, 755.30 Non Current P234, 346.20
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