At the beginning of current year, an entity sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental. Annual rental payable at the end of each year Problem 15-13 (IFRS) Sale price at fair value Carrying amount of equipment 6,000,000 4,500,000 800,000 10% Implicit interest rate Present value of an ordinary nnuity of 1 at 10% for four periods 3.17 1. What is the initial lease liability?

At the beginning of current year, an entity sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental. Annual rental payable at the end of each year Problem 15-13 (IFRS) Sale price at fair value Carrying amount of equipment 6,000,000 4,500,000 800,000 10% Implicit interest rate Present value of an ordinary nnuity of 1 at 10% for four periods 3.17 1. What is the initial lease liability?

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Question

with remaining life of 10 years and immediately leased it
Annual rental payable at the end of each year
Problem 15-13 (IFRS)
At the beginning of current year, an entity sold an equipment
back for 4 years at the prevailing market rental.
Sale price at fair value
Carrying amount of equipment
6,000,000
4,500,000
800,000
Implicit interest rate
Present value of an ordinary nnuity of
1 at 10% for four periods
10%
3.17
1 What is the initial lease liability?
a. 2,536,000
b. 3,200,000
c. 3,000,000
d.
2 What is the cost of right of use asset?
a. 1,902,000
b. 2,598,000
c. 2,536,000
d.
3. Whta is the gain on right transferred?
a. 866,000
b. 634,000
c. 750,000
d.
4. What is the annual depreciation of the lessee?
a. 475,500
b. 190,200
c. 634,000
d. 253,600

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