PROBLEM 4: Lease arrangement with Guaranteed Residual Value and annual fixed lease payment is paid at the beginning of each year, with DIRECT COST and LEASE INCENTIVE Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of P600,000 which is to be paid in advance at the beginning of each year. The lease contract provides that the lessee has guaranteed a P100,000 residual value of the leased asset and a lease incentive P80,000. Initial direct cost incurred and paid by the lessee amounted to P200,000. The implicit interest rate in the lease is 10%. REQUIRED: Prepare table of amortization and journal entries for the entire lease term.

PROBLEM 4: Lease arrangement with Guaranteed Residual Value and annual fixed lease payment is paid at the beginning of each year, with DIRECT COST and LEASE INCENTIVE

Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of P600,000 which is to be paid in advance at the beginning of each year. The lease contract provides that the lessee has guaranteed a P100,000 residual value of the leased asset and a lease incentive P80,000. Initial direct cost incurred and paid by the lessee amounted to P200,000. The implicit interest rate in the lease is 10%. REQUIRED: Prepare table of amortization and journal entries for the entire lease term.

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