LEASES | NOTE 10. LEASES At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. Leases are classified as either finance leases or operating leases based on criteria in Accounting Standards Codification (“ASC”) 842. Operating leases are included in ROU assets-Operating lease, Current Operating Lease liabilities and Operating lease liabilities, finance leases are included in Property and Equipment and Other Liabilities in the condensed Consolidated Balance Sheet. Right-of-use (“ROU”) assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the lease did not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in China market. ROU assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the ROU asset on a straight-line basis over the asset’s estimated useful life and interest expense is calculated using the amortized cost basis. As of July 31, 2021, the Company has multiple operating leases for office spaces and a finance lease of land and hotel building. Our operating leases have remaining lease terms ranging from one year five years In July and September 2021, HF Int’l Education entered two sublease agreements to sublease some office spaces with two-year term. Amount of $ 38,222 126,807 On September 1, 2020, Gelinke entered a five 1.2 1 40,005 HZHF terminated its original office lease on January 6, 2021. Approximately $ 287,000 258,000 49,000 27,000 The finance lease was obtained through HZLJ acquisition on March 22, 2019. On October 1, 2010, HZLJ took over the lease of the land and hotel building for 41 Lease-related assets and liabilities at April 30, 2022 and July 31, 2021 were as follows: SCHEDULE OF LEASE-RELATED ASSETS AND LIABILITIES April 30, 2022 (unaudited) July 31, 2021 Assets Finance lease right-of-use assets, cost $ 284,248 $ 290,714 Less: accumulated amortization (73,632 ) (80,547 ) Finance lease right-of-use assets, net 210,616 210,167 ROU assets-Operating lease 3,100,933 3,837,186 Total Lease ROU assets $ 3,311,549 $ 4,047,353 Liabilities Current Operating Lease liabilities $ 1,277,300 $ 1,130,406 Operating lease liabilities, noncurrent 2,426,766 3,164,081 Finance lease liabilities, noncurrent 358,312 368,715 Total Lease liabilities $ 4,062,378 $ 4,663,202 No impairment of the ROU assets was identified during the three and nine months ended April 30, 2022. The components of lease cost for the periods ended April 30, 2022 and 2021: SCHEDULE OF COMPONENTS OF LEASE COST Three months ended April 30, Nine months ended April 30, 2022 (unaudited) 2021(unaudited) 2022 (unaudited) 2021(unaudited) Operating lease cost $ 280,712 $ 356,715 $ 873,317 $ 1,047,066 Finance leases: Amortization of ROU assets 1,797 1,744 5,370 5,308 Interest on finance lease liabilities 7,083 6,785 21,167 20,652 Finance lease cost 8,880 8,529 26,537 25,960 Total lease cost $ 289,592 $ 365,244 $ 899,854 $ 1,073,026 Supplemental cash flow information for leases for the nine months ended April 30, 2022 and 2021: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION FOR LEASES Nine months ended April 30, 2022 2021 Operating cash flows paid for operating leases $ 616,388 $ 773,347 Financing cash flows paid for finance leases 23,441 21,900 The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases was as follows: SCHEDULE OF WEIGHTED-AVERAGE REMAINING LEASE TERM AND WEIGHTED-AVERAGE DISCOUNT RATE FOR OPERATING AND FINANCE LEASES April 30, 2022 Operating Leases Finance Leases Weighted-average remaining lease term (years) 3.3 29.3 Weighted-average discount rate 8 % 8 % The following table reconciles the undiscounted future minimum lease payments for operating and finance leases executed at April 30, 2022: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR OPERATING AND FINANCE LEASES Operating Leases Finance Leases 2022 $ 720,256 $ - 2023 1,118,356 23,455 2024 1,169,408 24,211 2025 1,083,119 24,968 2026 86,071 25,724 2027 and thereafter - 934,403 Total lease payments $ 4,177,210 $ 1,032,761 Less interest (473,144 ) (674,449 ) Present value of future lease payments $ 3,704,066 $ 358,312 Current Lease liabilities 1,277,300 - Noncurrent Lease liabilities 2,426,766 358,312 |