The commencement date of the lease is 1 April 20X5 The lease agreement is for a period of four years and requires four lease payments in advance of C110 000. The first payment is due on 1 April 20x5 and the remaining three payments on 1 April 20X6, 1 April 20X7 and 1 April 20X8.
The contract stipulates a residual value guarantee of C80 000. At the inception of the lease, Eagle Limited expects that the fair value of the bus at the end of the lease term will be C42 500. The estimated useful life of the bus is six years.
Eagle Limited's incremental borrowing rate is 7%. The following present value table is
provided:
PV factor Present value of annuity in advance of C1 for four years, discounted at 7% 3,62431
Present value of C1 in four years, discount at 7%
0,76289
The financial year end of Eagle Limited is 31 March.
Required
1.1. Prepare the journal entries in the accounting records of Eagle Limited for the year ended 31 March 20X6 (the first year of the contract) and 31 March 20X9 (the last year of the contract).

 please show the effective interest rate table and how does a  lease note look.

Answer rating: 100% (QA)

A C 1 Journal Entry 2 Accounts title and explanation Debit in C C... View the full answer