Turcotte Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of
Question:
Turcotte Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of its office locations. Turcotte leased 50 machines from Coffee Tyme Ltd. on July 1, 2020. (To purchase the coffee machines instead would have cost Turcotte $350 per machine, and the machines would have lasted an estimated five years.) The lease calls for semi-annual payments for the next three years, in the amount of $40 per machine. The payments start on July 1, 2020. At the end of the three-year period, the machines will have to be returned to the lessor. Discuss how Turcotte should account for the lease and prepare the entry for the first payment on July 1, 2020. Would your entry for the first payment differ if Turcotte followed ASPE?
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781119497042
12th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy