On 1 January 2015, Tommy Co. enters into a leasing agreement with Ezzy Co. for equipment costing 108,000$. The lease agreement contained the following provisions: 

Lease Term Economic Useful Life Depreciation method Six annual rental payments, in arrears (Commencing 31 6 years 8 years Straight-line method 25,000$ per year December 2015) Interest rate implicit in lease 10% After the end of the lease term, the title of the equipment will not be transferred to Tommy Co. The equipment will have no residual value at the end of its economic useful life. 

Requirements: 

1. Calculate the present value of minimum lease payments for the contract 

2. Prepare the books under Tommy Co. for the interests allocated to the financial year 2015 until 2020 

3. Statement of comprehensive income for years ended 31 December 2017 for Tommy Co. 

4. Statement of financial position as of 31 December 2017 for Tommy Co. (Note: for the purpose of the calculations, interest should be apportioned in accordance with the actuarial method)

Answer rating: 100% (QA)

Answer Tommy Company Statement of Financial position 3... View the full answer