Solution of example 2.1, 2.2, 2.

3
Measurement at commencement date
year payments discount factor Present value
0 50000 1 50,000
1 50000 0.952380952380952 47,619
2 50000 0.90702947845805 45,351
3 50000 0.863837598531476 43,192
4 50000 0.822702474791882 41,135
5 50000 0.783526166468459 39,176
6 50000 0.746215396636627 37,311
7 50000 0.710681330130121 35,534
8 50000 0.676839362028687 33,842
9 50000 0.644608916217797 32,230
Total 405,391
lease liability 355,391
Subsequent measurement, without remeasurement of lease payment

Beginning Lease lease liability payment Remain LL (at the Interest (at the
Year Liability (beginning of year) end of year) end of year)
0 355391 0 355391 17770
1 373161 50000 323161 16158
2 339319 50000 289319 14466
3 303785 50000 253785 12689
4 266474 50000 216474 10824
5 227298 50000 177298 8865
6 186162 50000 136162 6808
7 142971 50000 92971 4649
8 97619 50000 47619 2381
9 50000 50000 0 0

After new lease payment applicable at the beginning of year 2, new lease liability calculation
year payments discount factor Present value
2 54000 1 54,000
3 54000 0.952380952380952 51,429
4 54000 0.90702947845805 48,980
5 54000 0.863837598531476 46,647
6 54000 0.822702474791882 44,426
7 54000 0.783526166468459 42,310
8 54000 0.746215396636627 40,296
9 54000 0.710681330130121 38,377
Total new lease liability 366,464
 On the commencement date
DR Right of use asset 405,391
CR Lease liability 355,391
CR Cash 50,000
AT the end of year 0
Interest on lease liability
DR Interest expense 17770
CR Lease liability 17770
At the beginning of year 1
Payment
DR Lease liability 50000
CR Cash 50000

Ending LL
373161
339319
303785
266474
227298
186162
142971
97619
50000
0
Remearsurement of lease liability after CPI changing
New lease liability 366464
Old lease liability 339319
Increase in LL 27145

DR right of use asset 27145

CR lease liability 27145