Maxim Company leased an office under a five-year contract, which has been accounted for as an operating lease. Faced with the downturn in the economy, the viable company decided to sub-lease the office. However, they have had no luck with this effort and the landlord will not allow the lease to be canceled. The payments are $8,000 per year and there are four years left on the lease. The company's most recent interest rate for financing from a bank is 6%. The risk-free rate on government bonds is 4%. What is the provision for the lease under IFRS? A) 30,096 B) 29,040 C) 32,000 D) 27,721
Maxim Company leased an office under a five-year contract, which has been accounted for as an operating lease. Faced with the downturn in the economy, the viable company decided to sub-lease the office. However, they have had no luck with this effort and the landlord will not allow the lease to be canceled. The payments are $8,000 per year and there are four years left on the lease. The company's most recent interest rate for financing from a bank is 6%. The risk-free rate on government bonds is 4%. What is the provision for the lease under IFRS? A) 30,096 B) 29,040 C) 32,000 D) 27,721
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter11: Notes, Bonds, And Leases
Section: Chapter Questions
Problem 9Q
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Transcribed Image Text:Maxim Company leased an office under a five-year contract,
which has been accounted for as an operating lease. Faced with
the downturn in the economy, the viable company decided to
sub-lease the office. However, they have had no luck with this
effort and the landlord will not allow the lease to be canceled.
The payments are $8,000 per year and there are four years left
on the lease. The company's most recent interest rate for
financing from a bank is 6%. The risk-free rate on government
bonds is 4%. What is the provision for the lease under IFRS?
A) 30,096
B) 29,040
C) 32,000
D) 27,721
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