Refer to the data and other information provided in E20-1, but now assume that Maleki's fiscal year
Question:
In E20-1
On January 1, 2017, Maleki Corp., which uses IFRS 16, signs a 10-year, non-cancellable lease agreement to lease a specialty lathe from Liu Inc. The following information concerns the lease agreement.
1. The agreement requires equal rental payments of $73,580 beginning on January 1, 2017.
2. The lathe's fair value on January 1, 2017 is $450,000.
3. The lathe has an estimated economic life of 12 years, with an unguaranteed residual value of $12,000. Maleki Corp. depreciates similar equipment using the straight-line method.
4. The lease is non-renewable. At the termination of the lease, the lathe reverts to the lessor.
5. Maleki's incremental borrowing rate is 12% per year. The lessor's implicit rate is not known by Maleki Corp.
6. The yearly rental payment includes $2,470.29 of executory costs related to insurance on the loom.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Intermediate Accounting
ISBN: 978-1119048541
11th Canadian edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
Question Posted: