Kingston plc leases equipment from Falls Ltd. on January 1, 2022. The lease agreement does not transfer

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Kingston plc leases equipment from Falls Ltd. on January 1, 2022. The lease agreement does not transfer ownership or contain a bargain purchase option, and it is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Kingston’s journal entries on January 1, 2022, and December 31, 2022. Assume the annual lease payment is £35,000 at the beginning of each year, and Kingston’s incremental borrowing rate is 6%, which is the same as the lessor’s implicit rate.

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Intermediate Accounting IFRS

ISBN: 9781119607519

4th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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