6BL. Enterprise Limited is a finance company which deals in lease financing. On January 1, 2016 the company entered into a leasing agreement with Charles Construction Limited to lease a specialized equipment for a period of 8 years, Under the lease agreement, GBL. Enterprise Limited was responsible for the maintenance, insurance and repairs. The cost of the equipment was \(\$ 3.8 \mathrm{~m) \) and the annual rental was \(\$ 700,000 \) payable at the end of each. The estimate economic life of the equipment was 10 years after which it is expected to have a scrap value of \(\$ 150,000 \). The implicit rate of interest is \( 12 \%\) per annum and the fair value of the equipment was \(\$ 4.5 \mathrm{m} \). Required: a. Prepare the Journal entries for Charles Construction Limited for 31 December 2016? b. Prepare the Extracts for the Income Statement and the Statement of Financial Position as at December 312017. c. Prepare the Extract for the Income Statement for GBL Enterprise Limited for three years endi 31 December 2018 ? d. Show the disclosure requirements as per IFRS 16?
6BL. Enterprise Limited is a finance company which deals in lease financing. On January 1, 2016 the company entered into a leasing agreement with Charles Construction Limited to lease a specialized equipment for a period of 8 years, Under the lease agreement, GBL. Enterprise Limited was responsible for the maintenance, insurance and repairs. The cost of the equipment was \(\$ 3.8 \mathrm{~m) \) and the annual rental was \(\$ 700,000 \) payable at the end of each. The estimate economic life of the equipment was 10 years after which it is expected to have a scrap value of \(\$ 150,000 \). The implicit rate of interest is \( 12 \%\) per annum and the fair value of the equipment was \(\$ 4.5 \mathrm{m} \). Required: a. Prepare the Journal entries for Charles Construction Limited for 31 December 2016? b. Prepare the Extracts for the Income Statement and the Statement of Financial Position as at December 312017. c. Prepare the Extract for the Income Statement for GBL Enterprise Limited for three years endi 31 December 2018 ? d. Show the disclosure requirements as per IFRS 16?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:6BL. Enterprise Limited is a finance company which deals in lease financing. On January 1, 2016 the company entered into
a leasing agreement with Charles Construction Limited to lease a specialized equipment for a period of 8 years, Under the
lease agreement, GBL. Enterprise Limited was responsible for the maintenance, insurance and repairs. The cost of the
equipment was \(\$ 3.8 \mathrm{~m) \) and the annual rental was \(\$ 700,000 \) payable at the end of each. The
estimate economic life of the equipment was 10 years after which it is expected to have a scrap value of \(\$ 150,000 \).
The implicit rate of interest is \( 12 \%\) per annum and the fair value of the equipment was \(\$ 4.5 \mathrm{m} \).
Required:
a. Prepare the Journal entries for Charles Construction Limited for 31 December 2016?
b. Prepare the Extracts for the Income Statement and the Statement of Financial Position as at December 312017.
c. Prepare the Extract for the Income Statement for GBL Enterprise Limited for three years endi 31 December 2018 ?
d. Show the disclosure requirements as per IFRS 16?
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