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Applied Auditing 2017
Applied Auditing 2017
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CHAPTER 26 Long-term Financial Liabilities and Debt Restructuring
Page Remarks
1007 Entries to record transactions in 2016
1. To record the issuance of the bonds on January 1, 2016
Interest Expense (Should be Cash) ₱5,788,532
CHAPTER 27 Lease
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1107 The annual lease payments are unchanged (₱150,000 payable at the end of 5th to 15th
year). Lessee's incremental borrowing rate at the beginning of 2020 is 12% per annum.
1112 *Note: if the sublease is treated as operating lease by the intermediate lessor, no journal
entry is to be made to derecognize the right of use asset.
1119 The journal entry on the part of the Seller-Lessee should be:
Cash ₱2,000,000
Rights of use asset 742,476
Gain on rights transferred ₱ 283,276
Lease liability 1,459,200
Building 1,000,000
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