Graham Corp. has been in negotiations with D Corp., to lease a machine. The facts listed...

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Graham Corp. has been in negotiations with D Corp., to lease a machine. The facts listed below are for a noncancellable lease agreement between Graham Corp. (the lessee) and D Corp. (the lessor). Inception date is March 1, 2027. Annual lease payment due at the beginning of each year, starting March 1, 2027, is $80,000. Purchase option price at end of lease term reasonably certain to be exercised by Graham Corp. is $50,000. Lease term is 14 years. Economic life of leased machine ($0 salvage value after 16 yr.s) is 16 years. Lessor's (D Corp.) cost is $800,000. Fair value of machine at March 1, 2027 is $907,726. Lessor's implicit rate is 4%. Lessee's incremental borrowing rate is 4%. The collectability of lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. Both Graham Corp. and D Corp. use IFRS 16. Required: Round all currency to 2 decimal places where applicable. a) Calculate (present your calculations for) the amount of the right-to-use asset and lease liability. Graham Corp. has been in negotiations with D Corp., to lease a machine. The facts listed below are for a noncancellable lease agreement between Graham Corp. (the lessee) and D Corp. (the lessor). Inception date is March 1, 2027. Annual lease payment due at the beginning of each year, starting March 1, 2027, is $80,000. Purchase option price at end of lease term reasonably certain to be exercised by Graham Corp. is $50,000. Lease term is 14 years. Economic life of leased machine ($0 salvage value after 16 yr.s) is 16 years. Lessor's (D Corp.) cost is $800,000. Fair value of machine at March 1, 2027 is $907,726. Lessor's implicit rate is 4%. Lessee's incremental borrowing rate is 4%. The collectability of lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. Both Graham Corp. and D Corp. use IFRS 16. Required: Round all currency to 2 decimal places where applicable. a) Calculate (present your calculations for) the amount of the right-to-use asset and lease liability.

Answer rating: 100% (QA)

A Right of use assets Leas liability at inception date P... View the full answer