The company FWE ehf. is preparing to build a new warehouse and distribution center and construction is expected to be completed by the end of 2022. On October 1, 2019, FWE signed an agreement with LÁH for the lease of a 14,500 square meter warehouse, the lease period shall be a minimum of three years, or until the company's new premises are ready. According to the agreement, LÁH is to deliver the FWE warehouse on 1 January 2020, at which time FWE is also required to pay the first payment out of twelve payments according to Art. the contract. Due dates according to the agreement is January 1, April 1, July 1 and October 1 each year, ie. four times a year. Rent according to the agreement is ISK 3,600,000. for every three months and each rent payment shall be paid at the beginning of each period. FWE also has to pay a guarantee and supervision fee in the amount of ISK 135,000. for every three months in addition to each rental payment. FWE undertakes to bring the rented premises in the same condition as the company took over the premises at the end of the rental period and shall pay up to ISK 12,000,000. if it does not work. FWE's management estimates that the company will not incur any costs due to the obligation. A member hired a specialist to assist him in concluding the contract and paid him a total of ISK 750,000. on January 1, 2020 for services provided. FWE's loan terms on new loans are 8.25% (annual interest) but the company is aware that the landlord's interest rate is 8.00% (annual interest). The company uses IFRS 16 as an accounting rule when assessing leases.

The following needs to be resolved;

What is the present value of the rental property and rental debt.
Set up a table that shows dates, payment order, interest on rent, installments on rent and the remaining rent.
Show what entries need to be made in FWE's accounts in the year 2020 due to the lease agreement. Be sure to show all dates, names of relevant accounting keys and all figures in whole dollars. Entries may be displayed as T-invoices instead of standard presentation if you prefer.

Can you please put this up in excel and show every calculation, and put behind every account whether it's in balance sheet (BS) or in income statement

Answer rating: 100% (QA)

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