Calculate the maximum amount of loan proceeds available under the Manitoba National Bank (MNB) secured term loan, given the terms and conditions listed in Appendix II. Qualitatively compare the characteristics of the two sources of financing available to Agri-Pane

Given the lease terms listed in Appendix III, discuss how the lease would be recognized in the financial statements. As part of this discussion, determine the impact on the statement of financial position when the lease is initially recognized as well as the impact on the statement of comprehensive income for fiscal 2022. Assume that the first lease payment would be paid in early July 2021

   

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Appendix III Lease arrangement and other equipment information SLR has agreed to lease the equipment to Agri-Panel with the following terms: • Annual payments of $6,000,000 are due at the beginning of the period (first payment due July 2021). • Term is eight years. • At the end of the lease, the equipment will revert to the lessor. Agri-Panel will be responsible for all maintenance and insurance costs related to the equipment. ● • The implied interest rate in the lease is 6%. • SLR has the right to restrict the use of the equipment. Other information related to the equipment: • The equipment qualifies as Class 53, and qualifies for the Accelerated Investment Incentive, whereby capital cost allowance (CCA) is 100% of the cost of the asset in the first year. This equipment is the only asset in Class 53, and Agri-Panel does not expect to add any more assets to the class. • The equipment has a useful life of eight years, after which it can be sold for a salvage value of $3,000,000. • Annual insurance and maintenance costs are expected to be $2,300,000 per year (assumed paid at the end of the year). The company's income tax rate is 25%. Appendix III Lease arrangement and other equipment information SLR has agreed to lease the equipment to Agri-Panel with the following terms: • Annual payments of $6,000,000 are due at the beginning of the period (first payment due July 2021). • Term is eight years. • At the end of the lease, the equipment will revert to the lessor. Agri-Panel will be responsible for all maintenance and insurance costs related to the equipment. ● • The implied interest rate in the lease is 6%. • SLR has the right to restrict the use of the equipment. Other information related to the equipment: • The equipment qualifies as Class 53, and qualifies for the Accelerated Investment Incentive, whereby capital cost allowance (CCA) is 100% of the cost of the asset in the first year. This equipment is the only asset in Class 53, and Agri-Panel does not expect to add any more assets to the class. • The equipment has a useful life of eight years, after which it can be sold for a salvage value of $3,000,000. • Annual insurance and maintenance costs are expected to be $2,300,000 per year (assumed paid at the end of the year). The company's income tax rate is 25%.

Answer rating: 100% (QA)

Impact on the statement of financial position Recognize a rightofuse asset of 48000000 present ... View the full answer