On 1 July 2020, Harry Ltd leased a crane from Potter Ltd. The crane cost Potter...
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On 1 July 2020, Harry Ltd leased a crane from Potter Ltd. The crane cost Potter Ltd $120 307, considered to be its fair value on that same day. The finance lease agreement contained the following provisions: The lease term is for 3 years, starting on 1 July 2020 The lease is cancellable, but only with the permission from the lessor. Annual lease payment, payable on 30 June each year $39 000 Estimated useful life of crane 4 years Estimated residual value of crane at end of lease term $22 000 Residual value guarantee by Harry Ltd $16000 Interest rate implicit in the lease 7% Required 1. Prepare the lease schedules for Harry Ltd and Potter Ltd. 2. Prepare the journal entries in the records of Harry Ltd only for the year ended 30 June 2021. On 1 July 2020, Harry Ltd leased a crane from Potter Ltd. The crane cost Potter Ltd $120 307, considered to be its fair value on that same day. The finance lease agreement contained the following provisions: The lease term is for 3 years, starting on 1 July 2020 The lease is cancellable, but only with the permission from the lessor. Annual lease payment, payable on 30 June each year $39 000 Estimated useful life of crane 4 years Estimated residual value of crane at end of lease term $22 000 Residual value guarantee by Harry Ltd $16000 Interest rate implicit in the lease 7% Required 1. Prepare the lease schedules for Harry Ltd and Potter Ltd. 2. Prepare the journal entries in the records of Harry Ltd only for the year ended 30 June 2021.
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Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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