A. Victory Company signed a 6-year lease for a store space on January 1, 2017. The entity has an option to renew the lease for an additional 4-year period on or before January 1, 2020. During January 2019, the entity made substantial improvement to the store. The cost of the improvement was P1,080,000 with an estimated useful life of 10 years. On December 31, 2019, the entity intended to exercise the renewal option. The entity has taken a full year depreciation on this leasehold improvement for 2019. On December 31, 2019, what is the carrying amount of the leasehold improvement?
B. At the beginning of 2020, Trump Company leased an equipment with the following information: Annual rental payable at the end of each year P450,000; residual value guarantee P50,000; Lease incentive received P20,000; Lease term 4 years; Useful life of the equipment 8 years; implicit interest rate 10%; present value of an ordinary annuity of 1 at 10% for 4 periods 3.17; present value of 1 at 10% for 4 periods 0.68. What is the cost of right of use asset?
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