B D E F G H 1 Question 2: Lease Accounting - Lessee (15 marks) 2 QUESTION DATA: You, the Controller at Lupin Jewels Co. just completed a review of a new non-cancellable lease agreement with Ben's Leasing Co. After applying the appropriate lease classification criteria, you correctly concluded the lease to be treated as a capital lease in accordance with IFRS. During your analysis, you obtained the following facts: Lease term commencing April 1, 2021 Economic life of leased equipment Fair value of leased equipment at April 1, 2021 $100,000 7 Guaranteed residual value at end of lease term $10,000 4 years 6 years 00w The asset will revert to Ben's Leasing Co. at the end of the lease term. Lupin Jewels Co. uses the straight-line depreciation method for all 9 equipment. 10 You prepared the following correct amortization schedule for the first three lease payments: 11 Date Carrying Payment Interest Principal 12 value 13 1-Apr-21 $ 100,000 14 1-Apr-21 P1 14,239 14,239 85,761 15 1-Apr-22 P2 14,239 5,146 9,093 76,668 16 1-Apr-23 P3 14,239 4,600 9,639 67,029 17 REQUIRED: You are preparing the financial statement presentation for Lupin Jewels Co. year-end of December 31. Answer the following questions with respect to this lease agreement. 18 19 (1) What accounts and amounts will appear on Lupin's income statement for the year ending December 31, 2021? Use the drop-down 20 boxes to select the appropriate account name. Round all final amounts to the nearest whole dollar using the ROUND formula. 21 22. Account name Amount $ 23 *ROUND to 24 O decimals 25 (2). What accounts and amounts will appear on Lupin's balance sheet as at December 31, 2021? Use the drop-down boxes to select the appropriate account name under the classification provided. Round all amounts to the nearest whole dollar using the ROUND formula. 26 27 Classification Account Name Amount ($) 28 Non-current assets 29 30 *ROUND to O decimals 31 Current liabilities 32 33 Non-current liabilities 34