"Leased Liability":
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Hd.23.
![On January 1, 2021, Aylmer (follows IFRS) decided to lease a machine. The accountant at the time did not know how to
record this asset. NO TRANSACTIONS relating to leases were recorded. The following information pertains to the leased
machine:
The lease term is 6 years and the economic life of the asset is 7 years.
The annual payment is $22,740. This payment includes annual executory costs (insurance) of $890. The remainder is the
lease payment.
Interest rate associated with this lease is 5.75%.
In the Excel spreadsheet, see the tab labelled "Leased Liability" to make the appropriate calculations and requirements for
reconciling the lease information.
Present Value Calculation & Amortization Schedule
PV
Rate
Nper
Pymt
FV
Type
Required: Prepare all the appropriate entries (including setup up the asset, the liability and any payments and interest) for
the year 2021](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d0e6bf9-348c-40ab-ae4c-488cbc0bf710%2F0381b305-b6d5-4cd7-9f9d-854b84a90dcd%2Fyeebbhc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2021, Aylmer (follows IFRS) decided to lease a machine. The accountant at the time did not know how to
record this asset. NO TRANSACTIONS relating to leases were recorded. The following information pertains to the leased
machine:
The lease term is 6 years and the economic life of the asset is 7 years.
The annual payment is $22,740. This payment includes annual executory costs (insurance) of $890. The remainder is the
lease payment.
Interest rate associated with this lease is 5.75%.
In the Excel spreadsheet, see the tab labelled "Leased Liability" to make the appropriate calculations and requirements for
reconciling the lease information.
Present Value Calculation & Amortization Schedule
PV
Rate
Nper
Pymt
FV
Type
Required: Prepare all the appropriate entries (including setup up the asset, the liability and any payments and interest) for
the year 2021
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