On 30 June 2020, Small Ltd leases a large item of machinery from Fred Ltd. Small...

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On 30 June 2020, Small Ltd leases a large item of machinery from Fred Ltd. Small Ltd makes an initial payment of $200 000 on 30 June 2020 when the least term starts. All remaining lease payments are made in arrears. The lease agreement also contains the following information: Lease term (non-cancellable) 3 years Expected useful life of the leased machinery 6 years Expected salvage value at the end of useful life S120 000 Guaranteed residual value at the end of lease term $160 000 Net initial directly attributable costs $20 000 Annual lease payment (paid in arrears) $210 000 Annual maintenance & insurance included in lease payments $10 000 Interest rate implicit in the lease 10% p.a. Required: Calculate the lease liability and right-of-use asset that Small Ltd should recognise on its balance sheet on 30 June 2020. Q3.3 5 Points Based on the information provided in Q3.2, list all the items and amounts related to the above lease contract that would be included (but not necessarily disclosed separately) in extracts from the Income Statement and Balance Sheet of Small Ltd (the lessee) for the year ended 30 June 2021. Ignore the effect on cash account. On 30 June 2020, Small Ltd leases a large item of machinery from Fred Ltd. Small Ltd makes an initial payment of $200 000 on 30 June 2020 when the least term starts. All remaining lease payments are made in arrears. The lease agreement also contains the following information: Lease term (non-cancellable) 3 years Expected useful life of the leased machinery 6 years Expected salvage value at the end of useful life S120 000 Guaranteed residual value at the end of lease term $160 000 Net initial directly attributable costs $20 000 Annual lease payment (paid in arrears) $210 000 Annual maintenance & insurance included in lease payments $10 000 Interest rate implicit in the lease 10% p.a. Required: Calculate the lease liability and right-of-use asset that Small Ltd should recognise on its balance sheet on 30 June 2020. Q3.3 5 Points Based on the information provided in Q3.2, list all the items and amounts related to the above lease contract that would be included (but not necessarily disclosed separately) in extracts from the Income Statement and Balance Sheet of Small Ltd (the lessee) for the year ended 30 June 2021. Ignore the effect on cash account.

Answer rating: 100% (QA)

Date Paga No Date Page No 03 2 Lease term 3 years 033 Calculection of Intial le... View the full answer