Identify the differences between a Finance Lease and an Operating Lease 5.2.hijk Ltd leases an asset as a lessee. The lease agreement is for 6 years. Leaseinstalments of R145 545 made at the beginning of the period and interest rate is9%. The commencement of the lease is 1 April 2021. Asset is depreciated over 4years. The tax rate is 28%. Lease payments are allowed as a deduction whenpaid. Profit before tax is R600 000 Journalise the transactions for the year ended31 December 2021 (Journal narrations are required)

A lease agreement, additionally referred to as a rental agreement or lease contract, is a legally…

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Identify the differences between a Finance Lease and an Operating Lease 5.2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Identify the differences between a Finance Lease and an Operating Lease 5.2.
hijk Ltd leases an asset as a lessee. The lease agreement is for 6 years. Lease
instalments of R145 545 made at the beginning of the period and interest rate is
9%. The commencement of the lease is 1 April 2021. Asset is depreciated over 4
years. The tax rate is 28%. Lease payments are allowed as a deduction when
paid. Profit before tax is R600 000 Journalise the transactions for the year ended
31 December 2021 (Journal narrations are required)

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