ReddX Limited entered into an operating lease agreement with Giza Limited. In terms of the agreement,...

 

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ReddX Limited entered into an operating lease agreement with Giza Limited. In terms of the agreement, Giza Limited will lease a building from ReddX Limited for five years. The lease agreement had the following terms: Commencement date 1 March 2020 Period 5 years Annual lease instalment R120 000 Annual escalation (on 1 March) 12% Additional information: • ReddX Limited agreed to pay the relocation costs of Giza Limited as an incentive to Giza Limited for entering the lease. The relocation costs amounted to R55 000. • Lease instalments are payable annually in arrears. • Ignore all tax implications. REQUIRED: 1.1) Prepare the journal entries to account for the operating lease in ReddX Limited's records for the financial year ending 28 February 2021. Round all your answers to the nearest Rand. (19 marks) 1.2) Disclose the operating lease note in the financial statements of ReddX Limited for the financial year ending 28 February 2021 to comply with the requirements of International Financial Reporting Standards. ReddX Limited entered into an operating lease agreement with Giza Limited. In terms of the agreement, Giza Limited will lease a building from ReddX Limited for five years. The lease agreement had the following terms: Commencement date 1 March 2020 Period 5 years Annual lease instalment R120 000 Annual escalation (on 1 March) 12% Additional information: • ReddX Limited agreed to pay the relocation costs of Giza Limited as an incentive to Giza Limited for entering the lease. The relocation costs amounted to R55 000. • Lease instalments are payable annually in arrears. • Ignore all tax implications. REQUIRED: 1.1) Prepare the journal entries to account for the operating lease in ReddX Limited's records for the financial year ending 28 February 2021. Round all your answers to the nearest Rand. (19 marks) 1.2) Disclose the operating lease note in the financial statements of ReddX Limited for the financial year ending 28 February 2021 to comply with the requirements of International Financial Reporting Standards.

Answer rating: 100% (QA)

11 Total journal entries Operating Lease Expense 12000 Prepaid Rent 12000 Operating Lease Expense 13... View the full answer