Right of Use Assets

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

RIGHT OF USE ASSETS

10. RIGHT OF USE ASSETS

The Company entered into two leases, one for office space and one for an automobile lease that are classified as right of use assets and lease liabilities. The Company pays the lease payments on a residential unit in California that is used as an office/residential unit for certain of its marketing personnel. The lease is on a month-to month basis. The Company has occupied this unit for the past approximately 1-1/2 year period and intends to do so for the foreseeable future. The lease for the Company’s office space expire in June 2022.The lease for the automobile expires in June 2021.As the implicit interest rate is not readily identifiable in the leases, the Company calculated the present value of the leases using the average commercial real estate interest rate of 5.50% at the commencement of the office leases and the interest of 2.99% for the automobile lease. Applying the commercial rate, the Company calculated the present value of $339,833 for the office leases and $29,037 for the automobile leasing that are being amortized over the life of the leases. 

As of June 30, 2020, the right of use assets associated with future operating leases are as follows:

Total present value of right of use assets
under lease agreements	$	368,870
Amortization of right of use assets		(53,419	)
Total right of use assets as of June 30, 2020	$	315,451

Total amortization expense related to the right of use assets under the lease agreements was $54,660 and $25,579 for the six-month periods ended June 30, 2020 and 2019, respectively.