Question: Niko Ltd. signed a lease for a five-year term that requires yearly, beginning-of-year payments of $104,000 including maintenance. Based on allocating the lease payment on

Niko Ltd. signed a lease for a five-year term that requires yearly, beginning-of-year payments of $104,000 including maintenance. Based on allocating the lease payment on relative stand-alone prices, the lease component is $94,400 and the non-lease component for maintenance is $9,600. Niko has a residual guaranteed value of $26,500 at the end of the lease term. Niko's IBR is 10%. Required: 1. Calculate the ROU asset. 2. Record the initial journal entry at commencement of the lease. 3. How much will Niko record as an asset if the residual value is unguaranteed

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Lets go through the required calculations and journal entries step by step 1 Calculation of the ROU Asset The RightofUse ROU asset is initially recogn... View full answer

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1. Identify your reference point when making a decision based on an element of risk.

3. If there are reasonable alternatives, think about your decisions based on the different reference points and see if there are any contradictions in the decisions.

4. It is only at this point that you can give the problem your full attention in relation to the various ways you have framed the problem.