problem $1$

Leases $($Based on IFRS $16)(30\%)$

The following facts pertain to a non$-$cancellable lease agreement between Faldo Leasing company $($LESSOR$)$ and Shigeki Company$($LESSEE$).$

Inception date January $1,2019$

Annual lease payment, due at beginning of year, Beginning January $1,2019$ $$112,000$

UN$-$Guaranteed residual value of equipment $$45,000$

Lease term $6$ years

Economic life of leased equipment $10$ years

Fair value of the equipment on January $1,2019$ $$550,000$

Cost of the equipment on January $1,2019$ $$550,000$

Lessee's incremental borrowing rate $12\%$

Lessor's implicit interest rate

$11\%$

$10.$PVFAD $(i=12\%,n=6($annuity due$)$

$4\mathrm{.}60478$

$11.$PVFAD $($i$=11\%,n=6($annuity due$)$

$4\mathrm{.}69590$

$12.$PVF of $$1$ in $6$ years at $12\%$

$0\mathrm{.}50663$

$13.$PVF of $$1$ in $6$ years at $11\%$

$0\mathrm{.}53464$

The lessee assumes responsibility for all executory cost, which are expected to amount to $ $5,000$ per year and payable to others directly on December $31$ each year. The asset will revert to the lessor at the end of the lease term. The lessee DOES NOT guaranteed the lessor a residual value of $$50,000.$ The lessee uses the straight$-$ line depreciation method for al equipment. The lessee knows the implicit rate of return of the lessor. Both companies us the calendar year $($December $31$ is the year end$)$ for financial reporting. BOT COMPANIES ELECTED TO EARLY APPPICATION OF THE IFRS $16.($ROUND AI YOUR ANSWERS TO THE NEAREST DOLLAR$)$