The following details relate to a non-cancellable right-to-use lease agreement between East-West Ltd. (the Lessor) and...

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The following details relate to a non-cancellable right-to-use lease agreement between East-West Ltd. (the Lessor) and SeaWater Ltd. (the Lessee) for the lease of a small 38 metre, coastal vehicle transport ferry built in 2015. • Inception date: July 1, 2021 • Term of Lease: 10 Years Ten annual lease payments in arrears (the first due on June 30, 2022): $460,000.00 . b) • Bargain-Purchase Option price at end of lease term: $700 000.00 . Guaranteed residual: $1,100,000.00 Initial Lease Inception Payment, payable 1 July 2022: $100 000.00 Contracted Service & Maintenance Costs per year: $90,000.00 Remaining economic life of leased equipment: 15 years • Fair value of asset at 1 July 2021: $3,239,860.00 . . . Required: a) Prove that the implicit rate of interest is 9%. (Refer to Present value tables provided at (see the appendix page at the end this exam paper). Prepare a part Lease Schedule of Payments (table) for the period from Lease Inception (1 July 2020) for the first three years, then show the applicable journal entries on the lessee's books for the first three years of lease payments (2022, 2023 & 2024). SeaWater Ltd. 's annual accounting period ends on June 30. The following details relate to a non-cancellable right-to-use lease agreement between East-West Ltd. (the Lessor) and SeaWater Ltd. (the Lessee) for the lease of a small 38 metre, coastal vehicle transport ferry built in 2015. • Inception date: July 1, 2021 • Term of Lease: 10 Years Ten annual lease payments in arrears (the first due on June 30, 2022): $460,000.00 . b) • Bargain-Purchase Option price at end of lease term: $700 000.00 . Guaranteed residual: $1,100,000.00 Initial Lease Inception Payment, payable 1 July 2022: $100 000.00 Contracted Service & Maintenance Costs per year: $90,000.00 Remaining economic life of leased equipment: 15 years • Fair value of asset at 1 July 2021: $3,239,860.00 . . . Required: a) Prove that the implicit rate of interest is 9%. (Refer to Present value tables provided at (see the appendix page at the end this exam paper). Prepare a part Lease Schedule of Payments (table) for the period from Lease Inception (1 July 2020) for the first three years, then show the applicable journal entries on the lessee's books for the first three years of lease payments (2022, 2023 & 2024). SeaWater Ltd. 's annual accounting period ends on June 30.

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a To prove that the implicit rate of interest is 9 we can calculate the present value of the lease p... View the full answer