QUESTION 1 PART B Prosper 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: Lessor 1 April 2019 4 years Prosper Ltd is the: Commencement date Lease term Lease classification Fixed payments per annum at year end Residual value guarantee (RVG) as per lease contract FV of the guaranteed portion of asset at the end of lease UGRV at the end of lease IDC incurred by the lessor FV of the underlying asset The interest rate implicit in the lease Economic life of the asset The depreciation method used by the lessor The relevant present value discount factors are: Present value of $1 in n periods Present value of an annuity Interest income SCF classification Finance Lease $150 000 $120 000 $100 000 $200 000 $0 $752 208 7% 8 years Straight line n = 4 and i = 7% 0.7629 3.3872 CFOA Required: (1) Determine the finance lease receivable balance at the commencement date of the lease and complete the lessor's table in the space provided. (ii) Prepare financial statements, over the lease period, to reflect the effects of the lease. (iii) Clearly explain why there was a payment of $20 000 made by the Lessee to the Lessor on 31 March 2023. Prepare the journal entry for the lessor that includes the receipt of this $20 000. QUESTION 1 PART B - Answer template (i) Determine the finance lease receivable balance at the date of commencement: Discount factor Gross Investment in the lease Net investment in the lease Finance lease receivable reduction Finance lease receivable balance Table for Lease receipts and RVs Interest income the Lessor 7% Commencement of lease on 1 April 2019 31/03/2020 $ 31/03/2021 31/03/2022 31/03/2023 31/03/2023 QUESTION 1 PART B - Answer template continued: (ii) Prosper Ltd Financial Statements Statement of Financial Position as at 31 March: 2020 2021 2022 2023 Current assets: Non-current assets: Statement of Comprehensive Income for the year ending 31 March: 2020 2021 2022 2023 Por L section: OCI section: Statement of Cash Flows for the year ending 31 March: 2020 2021 2022 2023 CFOA: CFIA: CFFA: QUESTION 1 PART B answer template continued: (iii) Explanation and journal entry: Lessor journal entry: $ Dr $ Cr