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  3. on january 1,2023 , roldan company entered into a

On January 1,2023 , ROLDAN Company entered into a five-year lease of 4,000 square meters...

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Accounting

image On January 1,2023 , ROLDAN Company entered into a five-year lease of 4,000 square meters of office space for annual lease payment of P800,000 or P200 per square meter, due immediately. Incremental borrowing rate as of this date is 5%. On January 1,2024 , after paying the lease due for the year, the company and the lessor modified the contract by including an additional 3,000 square meters of office space over the remaining four-year lease term, with the additional lease payment due immediately. The incremental borrowing rate is 7% as of this date. Requirements: Under each of the following independent scenarios, determine the accounting procedures for the lease modification: First Scenario: The annual lease payment for additional 3,000 square meters was set at P600,000 Second Scenario: The annual lease payment for an additional 3,000 square meters was set at P 360,000

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