Farm Ltd leases some parcels of land from their owner for a period of 10 years at a time. The lease agreement can be cancelled, but a significant penalty will be incurred by Farm Ltd. The lease payments required include a payment up-front o
Farm Ltd leases some parcels of land from their owner for a period of 10 years at a time. The lease agreement can be cancelled, but a significant penalty will be incurred by Farm Ltd. The lease payments required include a payment up-front of $300 000, followed by another 9 payments of equal value at the end of every year up to the end of the ninth year. The implicit rate in the lease is 10%. PV of 9 payments at 10% is 5.7590. The first lease payment commenced on 1.7.21
Required:
(a) Calculate the present value of the lease payments at the inception of the lease.
(b) Prepare
(c) What is the amount of the lease liability at 30.06.23
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