Alfredo Ltd (lessor) entered into an agreement on 1 July 2022 to lease a processing plant to Fatimah Ltd (lessee). Alfredo considers this lease contract as a manufacturer-type lease. The cost of the plant to Alfredo is $85411. The terms of the lease agreement were: Lease term: 3 years; Economic life of plant: 5 years; • Annual rental payment, in arrears (commencing 30/6/2020): $165,000; Residual value guaranteed by Fatimah Ltd: $60,000; Interest rate implicit in the lease: 8%; •The lease is cancellable, but only with the permission of the lessor; and At the end of the lease term, the plant is to be returned to Alfredo Ltd. In setting up the lease agreement, Alfredo Ltd incurred $9851 in legal fees and stamp duty costs. The annual rental payment of $165,000 includes $15,000 to reimburse Alfredo Ltd for maintenance costs incurred on behalf of Fatimah Ltd. The net profit recognised by Alfredo on 1 July 2022 on the day of the lease inception is? PLEASE ENTER YOUR ANSWER IN WHOLE NUMBERS NO COMMAS OR DOLLAR SIGNS (EG $1,000,000 SHOULD BE SHOWN AS 1000000; -$1,000,000 SHOULD BE SHOWNS AS-1000000). Answer:
Alfredo Ltd (lessor) entered into an agreement on 1 July 2022 to lease a processing plant to Fatimah Ltd (lessee). Alfredo considers this lease contract as a manufacturer-type lease. The cost of the plant to Alfredo is $85411. The terms of the lease agreement were: Lease term: 3 years; Economic life of plant: 5 years; • Annual rental payment, in arrears (commencing 30/6/2020): $165,000; Residual value guaranteed by Fatimah Ltd: $60,000; Interest rate implicit in the lease: 8%; •The lease is cancellable, but only with the permission of the lessor; and At the end of the lease term, the plant is to be returned to Alfredo Ltd. In setting up the lease agreement, Alfredo Ltd incurred $9851 in legal fees and stamp duty costs. The annual rental payment of $165,000 includes $15,000 to reimburse Alfredo Ltd for maintenance costs incurred on behalf of Fatimah Ltd. The net profit recognised by Alfredo on 1 July 2022 on the day of the lease inception is? PLEASE ENTER YOUR ANSWER IN WHOLE NUMBERS NO COMMAS OR DOLLAR SIGNS (EG $1,000,000 SHOULD BE SHOWN AS 1000000; -$1,000,000 SHOULD BE SHOWNS AS-1000000). Answer:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Alfredo Ltd (lessor) entered into an agreement on 1 July 2022 to lease a processing plant to Fatimah Ltd
(lessee). Alfredo considers this lease contract as a manufacturer-type lease. The cost of the plant to
Alfredo is $85411.
The terms of the lease agreement were:
Lease term: 3 years;
Economic life of plant: 5 years;
• Annual rental payment, in arrears (commencing 30/6/2020): $165,000;
Residual value guaranteed by Fatimah Ltd: $60,000;
Interest rate implicit in the lease: 8%;
•The lease is cancellable, but only with the permission of the lessor; and
At the end of the lease term, the plant is to be returned to Alfredo Ltd.
In setting up the lease agreement, Alfredo Ltd incurred $9851 in legal fees and stamp duty costs. The
annual rental payment of $165,000 includes $15,000 to reimburse Alfredo Ltd for maintenance costs
incurred on behalf of Fatimah Ltd.
The net profit recognised by Alfredo on 1 July 2022 on the day of the lease inception is?
PLEASE ENTER YOUR ANSWER IN WHOLE NUMBERS NO COMMAS OR DOLLAR SIGNS (EG
$1,000,000 SHOULD BE SHOWN AS 1000000; -$1,000,000 SHOULD BE SHOWNS AS-1000000).
Answer:
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