Question: Please use the table QUESTION 1 PART B Cheap Finance Ltd has requested your help in preparing their financial statements as they are unsure of

Please use the table QUESTION 1 PART B Cheap Finance Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessors.

Please use the table

QUESTION 1 PART B Cheap Finance Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessors. You are provided with the following lease details: Cheap Finance Ltd is the: Lessor Commencement date 1 April 2019 Lease term 7 years Lease classification Finance Lease Upfront payment due on the commencement date $40 000 Fixed payments per annum received at year end $120 000 Extra final payment at end of the lease $40 000 Ownership transfers to the lessee at end of lease Yes IDC incurred by the lessor $0 The interest rate implicit in the lease 8% FV of underlying asset at commencement date ? Economic life of the asset The depreciation method used by the lessor Straight line The relevant present value discount factors are: Present value of $1 in n periods n=7 0.5835 Present value of an annuity i = 8% 5.2064 Interest income SCF classification CFOA 8 years Required: (1) Prepare the journal entry for Cheap Finance Ltd at commencement date. Determine the fair value of the underlying asset. (ii) Complete the lessor's table in the space provided. What is the total interest income for this lease? (iii) Prepare financial statements for Cheap Finance Ltd to reflect the effects of the lease for the financial periods ending 31 March 2020, 2022, 2024, and 2026. (iv) Is an additional final journal entry required at the end of the lease by Cheap Finance Ltd to recognise the transfer of ownership to the lessee? Explain your answer. QUESTION 1 PART B (i) The journal entry to recognise finance lease receivable $ Dr $ Cr 1/4/2019 The fair value of the underlying asset would be: $ (ii) Complete the table below Table for the Lessor Lease Interest Income 8% Finance Lease Receipts Receivable Reduction Commencement of lease on 1 April 2019 Finance Lease Receivable Balance 31/3/2020 31/3/2021 31/3/2022 31/3/2023 31/3/2024 31/3/2025 31/3/2026 31/3/2026 (iii) Cheap Finance Ltd Financial Statements Statement of Financial Position as at: Current assets: 31 March 2020 31 March 2022 31 March 2024 31 March 2026 Non-current assets: 31 March 2020 31 March 2022 31 March 2024 31 March 2026 Statement of Comprehensive Income for the year ending: Por L section: OCI section: 31 March 2020 31 March 2022 31 March 2024 31 March 2026 Statement of Cash Flows for the year ending: CFOA: CFIA: CFFA

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Will upvote answer. QUESTION 1 PART B Cheap Finance Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessors....

8 years QUESTION 1 PART B Cheap Finance Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessors. You are...

Will upvote answer. QUESTION 1 PART A Heavy Metal Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessees. You...

Question 1 Part A Lessor Lessor Ltd has requested your help in preparing their financial statements as they are unsure of the requirements of NZ IFRS 16 Leases. The finance lease details ommencement...

8 years QUESTION 1 PART A Heavy Metal Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessees. You are provided...

QUESTION 1 PART A Heavy Metal Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessees. You are provided with...

Please fill in the checkered Cheap Finance Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessors. You are...

QUESTION 1 Green Tea 4 Life Ltd has requested your help in preparing their financial statements as they are unsure of the requirements of NZ IFRS 1 6 Leases for lessees. You are provided with the...

What does GAAP provide in reference to the measuring and reporting of leases?

Implementing a Performance Management Communication Plan at Accounting, Inc. Accounting, Inc. is a consulting and accounting firm headquartered in Amsterdam, the Netherlands. Recently, Accounting,...

the possible rational zeros. n ( x ) = - 4 x ^ ( 6 ) + 1 2 x ^ ( 3 ) + 5 x ^ ( 2 ) - 1 0 If there is more than one answer, separat

CT Corp Comprehensive Question Canadian Tire Corporation, Limited (Canadian Tire) is a family of companies that includes a retail segment and a financial services division, among others. The retail...

LAST WORD What is a sunk cost? Provide an example of a sunk cost other than one from this book. Why are such costs irrelevant in making decisions about future actions?

KEY QUESTION Use the concepts of economies and diseconomies of scale to explain the shape of a firms long-run ATC curve. What is the concept of minimum efficient scale? What bearing can the shape of...

KEY QUESTION You are choosing between two goods, X and Y, and your marginal utility from each is as shown on the next page. If your income is $9 and the prices of X and Y are $2 and $1, respectively,...