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LEASES
 12 Months Ended
Dec. 31, 2021
Leases  
LEASES

3. Leases

 

Accounting and reporting guidance for leases requires that leases be evaluated and classified as either operating or finance leases by the lessee and as either operating, sales-type or direct financing leases by the lessor. For leases with terms greater than 12 months, the Company records the related right-of-use (“ROU”) asset and lease obligation at the present value of lease payments over the term. Leases may include fixed rental escalation clauses, renewal options and / or termination options that are factored into the determination of lease payments when appropriate. The Company’s operating leases are included in ROU assets, lease liabilities-current portion and lease liability-less current portion in the accompanying consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. The Company’s leases do not usually provide a readily determinable implicit rate; therefore, an estimate of the Company’s incremental borrowing rate is used to discount the lease payments based on information available at the lease commencement date. The discount rate used was 5.5%.

 

 

The table below summarizes the right-of-use asset and lease liability for the year ended December 31, 2021:

 

 SUMMARY OF RIGHT-OF-USE ASSET AND LEASE LIABILITY

Right of Use Assets    
Balance at December 31, 2019  $789,205 
Addition   260,661 
Termination   (234,980)
Depreciation   (331,773)
Balance at December 31, 2020  $483,113 
Depreciation   (265,846)
Balance at December 31, 2021  $217,267 
      
Lease Liability     
Balance at December 31, 2019  $789,205 
Addition   260,661 
Termination   (234,980)
Lease interest expense   53,768 
Payments   (385,541)
Balance at December 31, 2020  $483,113 
Lease interest expense   22,057 
Payments   (287,903)
Balance at December 31, 2021  $217,267 
      
Short-term portion  $77,715 
Long-term portion   139,552 
Total  $217,267 

 

Undiscounted rent payments are as follows:

 

 SCHEDULE OF UNDISCOUNTED RENT PAYMENTS

2022   78,240 
2022   78,240 
2023   77,100 
2024   70,440 
2025   71,940 
Total  $297,720 
Impact of discounting   (80,453)
Lease liability, December 31, 2021  $217,267