6. ABC is a pharmaceutical company, that needs to adopt IFRS 16 Leases in the reporting period ending 31 December 2020. ABC entered into the contract on 1st of January 2020 for 8 years, annual rental payments are $80 000 at the beginning of the lease term, the machine will be returned back to the lessor. The lessor having longlasting partnership relations with ABC provided lease incentives of $7 000. The economic life of a machine is 5 years. ABC incurred lease related direct costs of $30 000. Provide accounting entries for 31 December 2020 and 31 December 2021.
6. ABC is a pharmaceutical company, that needs to adopt IFRS 16 Leases in the reporting period ending 31 December 2020. ABC entered into the contract on 1st of January 2020 for 8 years, annual rental payments are $80 000 at the beginning of the lease term, the machine will be returned back to the lessor. The lessor having longlasting partnership relations with ABC provided lease incentives of $7 000. The economic life of a machine is 5 years. ABC incurred lease related direct costs of $30 000. Provide accounting entries for 31 December 2020 and 31 December 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:6. ABC is a pharmaceutical company, that needs to adopt IFRS 16 Leases in the reporting period ending 31
December 2020. ABC entered into the contract on 1st of January 2020 for 8 years, annual rental payments
are $80 000 at the beginning of the lease term, the machine will be returned back to the lessor. The lessor
having longlasting partnership relations with ABC provided lease incentives of $7 000. The economic life of
a machine is 5 years. ABC incurred lease related direct costs of $30 000. Provide accounting entries for 31
December 2020 and 31 December 2021.
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