On 1 July 2015, Clementi Ltd leased a processing plant to Jurong Ltd. The plant was purchased
Question:
On 1 July 2015, Clementi Ltd leased a processing plant to Jurong Ltd. The plant was purchased by Clementi Ltd on 1 July 2015 for its fair value of $895,304. The lease agreement contained the following provisions:
Lease term
Economic life of plant
Annual rental payment, in arrears (commencing 30/6/2016)
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.
3 years
4 years $300,000
$180,000 $100,000 7%
The $300,000 annual rental payment include $20,000 to reimburse Clementi Ltd for the maintenance of the plant.
Jurong Ltd intends to return the processing plant to the lessor at the end of the lease term.
Required
- a) Prepare the lease payment schedule for the lessee (show all workings).
- b) Write the journal entries in the records of the lessee for the year ending 30 June 2016 ONLY.
- c) Prepare the lease receipt schedule for the lessor (show all workings).
- d) Write the journal entries in the records of the lessor for the year ending 30 June
Taxation Of Individuals And Business Entities 2023 Edition
ISBN: 9781265790295
14th Edition
Authors: Brian Spilker, Benjamin Ayers, John Barrick, Troy Lewis, John Robinson, Connie Weaver, Ronald Worsham