The following information is extracted from a lease schedule in the records of Kennards Ltd

The information is for equipment acquired under a finance lease agreement.

Required

Based on the information from this lease schedule of Kennards Ltd what is

(a) The amount of the Fair value of the Lease Liability

(b) The amount of the Right of Use Equipment

(c) The lease interest rate

(d) The length of the term of the lease

(e) The date of the first lease payment

(f) Assuming the leased equipment will be returned at the end of the lease term, use this lease schedule to prepare the journal entries for the year ended 30 June 2021.

(g) Applying this lease schedule how would this information appear in the Balance Sheet as at 30 June 2021.

(h) Briefly explain how depreciation is considered for any right of use lease asset and how the number of years is determined when depreciating any right of use lease asset
 

Transcribed Image Text:

Lease Schedule Date Liability Beg Payment Interest Principal Liability End Expense 1 July 2019 567,180 507,180 397,898 277,688 145,457 60,000 160,000 160,000 160,000 60,000 109,282 120,210 507,180 30 June 2020 50,718 397,898 277,688 30 June 2021 39,790 27,769 14,543 132,231 145,457 30 June 2022 145,457 30 June 2023 160,000 Lease Schedule Date Liability Beg Payment Interest Principal Liability End Expense 1 July 2019 567,180 507,180 397,898 277,688 145,457 60,000 160,000 160,000 160,000 60,000 109,282 120,210 507,180 30 June 2020 50,718 397,898 277,688 30 June 2021 39,790 27,769 14,543 132,231 145,457 30 June 2022 145,457 30 June 2023 160,000

Answer rating: 100% (QA)

Solution of all the parts are given below Ans a Amount of Fair Value of Lease Liability Answer567180 Lease Liability is equal to present value of lease payments to be made over the period of lease ter... View the full answer