On 30 June 2020, Small Ltd leases a large item of machinery from Fred Ltd. Small...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 30 June 2020, Small Ltd leases a large item of machinery from Fred Ltd. Small Ltd makes an initial payment of $200 000 on 30 June 2020 when the least term starts. All remaining lease payments are made in arrears. The lease agreement also contains the following information: Lease term (non-cancellable) 3 years Expected useful life of the leased machinery 6 years Expected salvage value at the end of useful life S120 000 Guaranteed residual value at the end of lease term $160 000 Net initial directly attributable costs $20 000 Annual lease payment (paid in arrears) $210 000 Annual maintenance & insurance included in lease payments $10 000 Interest rate implicit in the lease 10% p.a. Required: Calculate the lease liability and right-of-use asset that Small Ltd should recognise on its balance sheet on 30 June 2020. Q3.3 5 Points Based on the information provided in Q3.2, list all the items and amounts related to the above lease contract that would be included (but not necessarily disclosed separately) in extracts from the Income Statement and Balance Sheet of Small Ltd (the lessee) for the year ended 30 June 2021. Ignore the effect on cash account. On 30 June 2020, Small Ltd leases a large item of machinery from Fred Ltd. Small Ltd makes an initial payment of $200 000 on 30 June 2020 when the least term starts. All remaining lease payments are made in arrears. The lease agreement also contains the following information: Lease term (non-cancellable) 3 years Expected useful life of the leased machinery 6 years Expected salvage value at the end of useful life S120 000 Guaranteed residual value at the end of lease term $160 000 Net initial directly attributable costs $20 000 Annual lease payment (paid in arrears) $210 000 Annual maintenance & insurance included in lease payments $10 000 Interest rate implicit in the lease 10% p.a. Required: Calculate the lease liability and right-of-use asset that Small Ltd should recognise on its balance sheet on 30 June 2020. Q3.3 5 Points Based on the information provided in Q3.2, list all the items and amounts related to the above lease contract that would be included (but not necessarily disclosed separately) in extracts from the Income Statement and Balance Sheet of Small Ltd (the lessee) for the year ended 30 June 2021. Ignore the effect on cash account.
Expert Answer:
Answer rating: 100% (QA)
Date Paga No Date Page No 03 2 Lease term 3 years 033 Calculection of Intial le... View the full answer
Related Book For
Posted Date:
Students also viewed these economics questions
-
Based on the information provided in Illustration Capsule 2.4, explain how corporate governance at Freddie Mac failed the enterprise's shareholders and other stakeholders . Which important...
-
Based on the information provided in the case Facebook 2015 Inc., develop an ADL Matrix and McKinsey Matrix based on information in the case. Explain the strategic implications and recommendations of...
-
Based on the information provided in Problem 2-6, what is the opportunity cost to this student of allocating enough additional study time on economics to move her grade up from a 90 to a 100? In...
-
Many states are now imposing severance taxes on resources being extracted within their borders. In order to understand the effect of these on the allocation of the mineral over time, assume a stable...
-
Suppose that 3% of the students at a particular college are known to carry HIV. a. If a student has 6 sexual partners during the course of a year, what is the probability that at least one of them...
-
Berg Drycleaners has determined the following about its costs: Total variable expenses are $40,000, total fixed expenses are $30,000, and the sales revenue needed to break-even is $40,000. Use the...
-
Which of the following functions is not common to the expenditure/disbursement cycle? a. Resources are acquired from vendors in exchange for obligations to pay. b. Obligations to vendors are paid. c....
-
You are considering three stocksA, B, and Cfor possible inclusion in your investment portfolio. Stock A has a beta of 0.80, stock B has a beta of 1.40, and stock C has a beta of 0.30. a. Rank these...
-
what extent do employees perceive the costs and benefits associated with leaving the organization, and how does this perception influence their willingness to stay ?
-
The map below shows the countries of Belize (B), Costa Rica (C), El Salvador (E), Guatemala (G), Honduras (H), Nicaragua (N), and Panama (P). Represent the map as a graph where each vertex represents...
-
What is the complete electron configuration for nitrogen? Express the complete electron configurations using the caret symbol prior to the superscript and 1 space between different orbitals (ex: Li...
-
In the performance of an audit, auditors base their opinions on a sample of transactions which occurred during the period because: Auditors are experts and do not need to look at much to know whether...
-
research 3 credit cards (these can be limited use and/or unlimited use) and include the most import factors for deciding which credit cards to possess. You must include the following factors: credit...
-
Revenue = 20 million Cost of Goods sold = 16 million Beg Inv = 900,000 Ending inv = 800,000 Total Assets = 8.5 million Find: Gross Margin Percentage = Average Inventory Investment = Percentage of...
-
Excel City's Water Utility Enterprise Fund issues $10,000,000 in 20-year serial revenue bonds to finance a major expansion of one of its water treatment plants. $500,000 in bonds mature each year. As...
-
PCG REPORTED PT DOES NOT KNOW HE IS ON HOSPICE AND WOULD LIKE FOR CARIS TEAM NOT TO MENTION IT TO HIM. SW WILL ENTER POIT CARE VISIT ALERT TO MAKE TEA AWARE AND MENTION IT ON STAND DOWN. PT IS...
-
Jerry purchased an annuity contract at the beginning of 2002 for $144,000. The contract specified that he and his wife would receive $1,000 per month for life. Jerry receives his first payment on...
-
What are the 5 Cs of marketing channel structure?
-
In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the following table: Derive the firm's...
-
The table below illustrates the demand and supply schedules for seats on air flights between two cities: What are the market price and equilibrium quantity in this market? Now suppose that federal...
-
Identify whether each of the following events poses an adverse selection problem or a moral hazard problem in financial markets. a. A manager of a savings and loan association responds to reports of...
-
Prove: 'Bernoulli's equation is a restrictive form of energy equation'.
-
What are the assumption made for the establishment of Bernoulli's equation?
-
A pipe, through which water is flowing, has diameters \(30 \mathrm{~cm}\) and \(15 \mathrm{~cm}\) at crosssections 1 and 2 respectively. The discharge velocity of the pipe is \(40 \mathrm{~L} /...
Study smarter with the SolutionInn App