Win Box Ltd acquired an item of equipment and enters into a non-cancellable lease agreement with Melbourne
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Question:
Win Box Ltd acquired an item of equipment and enters into a non-cancellable lease agreement with Melbourne Equipment Ltd on 1 January 2015. The lease consists of the following:
- Date of inception: 1/1/15
- Duration of lease: 4 years
- Life of leased asset: 5 years
- Lease payments (annual): $180,000 (annual) which includes $20,000 for
Maintenance and insurance costs per annum.
- Guaranteed residual value
(Added to final payment): $50,000
- Interest rate: 12%
Required:
- Determine the present value of minimum lease rental payment.
- Prepare the journal entries for ABC (the Lessee) using the Net Method for the following
Transfer of control
- Payment of annual payments for 2015 and 2016.
Related Book For
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
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