On 1 July 2019, True Ltd leased a plastic-moulding machine from Grit Ltd. The machine cost...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 July 2019, True Ltd leased a plastic-moulding machine from Grit Ltd. The machine cost Grit Ltd $130 000 to manufacture and had a fair value of $154 109 on 1 July 2019. The lease agreement contained the following provisions. Lease term Annual rental payment, in advance on 1 July each year Residual value at end of the lease term Residual guaranteed by lessee Interest rate implicit in lease The lease is cancellable only with the permission of the lessor. 4 years $41 500 $15 000 nil 8% The expected useful life of the machine is 6 years. True Ltd intends to return the machine to the Grit Ltd at the end of the lease term. Included in the annual rental payment is an amount of $1500 to cover the costs of maintenance and insurance paid for by the lessor. Required 1. Prepare the lease payments schedule for the True Ltd (show all workings). 2. Prepare the journal entries in the books of True Ltd for the year ended 30 June 2020. On 1 July 2019, True Ltd leased a plastic-moulding machine from Grit Ltd. The machine cost Grit Ltd $130 000 to manufacture and had a fair value of $154 109 on 1 July 2019. The lease agreement contained the following provisions. Lease term Annual rental payment, in advance on 1 July each year Residual value at end of the lease term Residual guaranteed by lessee Interest rate implicit in lease The lease is cancellable only with the permission of the lessor. 4 years $41 500 $15 000 nil 8% The expected useful life of the machine is 6 years. True Ltd intends to return the machine to the Grit Ltd at the end of the lease term. Included in the annual rental payment is an amount of $1500 to cover the costs of maintenance and insurance paid for by the lessor. Required 1. Prepare the lease payments schedule for the True Ltd (show all workings). 2. Prepare the journal entries in the books of True Ltd for the year ended 30 June 2020.
Expert Answer:
Answer rating: 100% (QA)
Following assumptions are taken First calculate minimum lease payment which is calculated as below M... View the full answer
Related Book For
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville
Posted Date:
Students also viewed these accounting questions
-
Using the LM formula derived in the problem above, calculate Y assuming r = 10 (10%). The value of Y is A) B) D) 900B 1,000B 1,050B 1,100B
-
Ryan Ltd commenced operations on 1 July 2019 and has one employee: Joe Hirsch. During the year ended 30 June 2021, Joe was paid $1,700 per week (an annual salary of $88,400). His only weekly...
-
On 1 July 2019 Black Ltd was formed out of the reorganization of a group of companies with foreign operations. The directors are reluctant to disclose related party infomation as they feel that such...
-
The programming language is Java and all of the Classes I was given are in bold. ALIEN CLASS import imagePackage.RasterImage; import java.awt.BasicStroke; import java.awt.Color; import...
-
Consider supersonic airflow approaching the nose of a two-dimensional wedge and experiencing an oblique shock. Under what conditions does an oblique shock detach from the nose of the wedge and form a...
-
A greeting card company can sell cards for $2.75 each. The companys total cost consists of a fixed overhead of $12,000 plus variable costs of 35 cents per card. a. Express the companys total revenue,...
-
An increase in which component of quality costs is most likely to result in a decrease in the other three components? a. prevention costs b. inspection costs c. internal failure costs d. external...
-
Prepare the stockholders equity section of Waldemar Corporations balance sheet from the following accounts and balances on December 31, 2014: Common Stock, $10 par value, 30,000 shares authorized,...
-
Digital World is a retail store that sells cameras and photography supplies. The firms credit purchases and purchases returns and allowances transactions for June 20X1 appear below, along with the...
-
Paul Poti, is the sole proprietor of Poti Enterprises, a small retail shop selling widgets located in Edmonton, AB. The shop has been in operation for several years. Paul provides you with the...
-
In physics "work" refers to the energy transferred to, or extracted from a system due to the action of an external force on the system. Students who took PHSI 131 are familiar with this concept, but...
-
Why do you think that the public views advertising executives and PR practitioners as unethical? What would you do to change strategic communications image problem?
-
Develop your own code of ethics. Start by writing down ten things you value and how you want to act in your everyday life. Then share your code with your classmates and discuss differences you have...
-
Review the list of soft skills and evaluate yourself on each on a scale of 110 where one represents Poor and 10 represents Outstanding. Then focus on the five soft skills you feel you are most...
-
What are some research questions that might be important to strategic communicators?
-
Below is a plot of the natural log of the fugacity coeffi cient, ln (i) , of pure NH3 as a function of pressure at a temperature of 100C. From this plot, as best you can, determine the molar volume...
-
Franklin Company obtained an $ 85,000 line of credit from the State Bank on January 1 , 2016 . The company agreed to acce interest rate that was set at 1 % above the bank 's prime lending rate . The...
-
Explain the term global capital markets. This chapter primarily discusses global equity markets. What other types of financial instruments are traded in these markets? How important are global...
-
Hullman Ltd prepares financial statements to 31 March each year. Consider each of the following situations and determine in each case whether or not a provision should be recognised in the company's...
-
An asset which cost £200,000 on 1 January 2016 is being depreciated on the straight line basis over a five year period with an estimated residual value of £40,000. The company which owns...
-
The Managing Director of Wraymand plc has asked you to prepare the statement of comprehensive income for the group. The company has one subsidiary undertaking, Blonk Ltd. The statements of...
-
Which of the following flowcharts illustrates the flow of information among areas of responsibility in an organization? a. program flowchart c. system flowchart b. computer configuration chart d....
-
Which of the following is not one of the recommended guidelines for making flowcharts more readable, clear, concise, consistent, and understandable? a. Divide the flowchart into columns with labels....
-
Data sources and destinations are represented in a data flow diagram as: a. a square d. two parallel lines b. a curved arrow e. none of the above c. a circle
Study smarter with the SolutionInn App