On 31 December 20X1, Lessee Ltd. entered into a lease agreement by which Lessee leased a...

 

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On 31 December 20X1, Lessee Ltd. entered into a lease agreement by which Lessee leased a jutling machine for six years. Annual lease payments are $20,000, payable at the beginning of each lease year (31 December). At the end of the lease, possession of the machine will revert to the lessor. The normal economic life for this type of machine is 8 to 10 years. At the time of the lease agreement, jutling machines could be purchased for approximately $90,000 cash. Equivalent financing for the machine could have been obtained from Lessee's bank at 14%. Lessee uses straight-line depreciation for its jutling machines. Required: 1. Prepare a lease liability amortization table for the lease. 2. Prepare all journal entries relating to the lease and the leased asset for 20X1, 20X2, and 20X3. 3. How would the amounts relating to the leased asset and lease liability be shown on Lessee's statement of financial position at 31 December 20X4? On 31 December 20X1, Lessee Ltd. entered into a lease agreement by which Lessee leased a jutling machine for six years. Annual lease payments are $20,000, payable at the beginning of each lease year (31 December). At the end of the lease, possession of the machine will revert to the lessor. The normal economic life for this type of machine is 8 to 10 years. At the time of the lease agreement, jutling machines could be purchased for approximately $90,000 cash. Equivalent financing for the machine could have been obtained from Lessee's bank at 14%. Lessee uses straight-line depreciation for its jutling machines. Required: 1. Prepare a lease liability amortization table for the lease. 2. Prepare all journal entries relating to the lease and the leased asset for 20X1, 20X2, and 20X3. 3. How would the amounts relating to the leased asset and lease liability be shown on Lessee's statement of financial position at 31 December 20X4?

Answer rating: 100% (QA)

1 YearLease PaymentLease Liability 20X12000090000 20X22000080000 2... View the full answer