n 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on 1 July 2020 for its fair value of $467 112. The lease agreement contained the following provisions: Lease term 3 years Economic terms of the plant 5 years Annual rental payments, in arrears (commencing 30?6/2021) $150,000 Residual value at the end of lease term $90,000 Residual guaranteed by lessee
On 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on 1 July 2020 for its fair value of $467 112. The lease agreement contained the following provisions:
|
Lease term |
3 years |
|
Economic terms of the plant |
5 years |
|
Annual rental payments, in arrears (commencing 30?6/2021) |
$150,000 |
|
Residual value at the end of lease term |
$90,000 |
|
Residual guaranteed by lessee |
$60,000 |
|
Interest rate implicit in lease |
7% |
|
The lease is cancellable only with the permission of the lessor |
|
Holmes Ltd intends to return the processing plant to Sherlock Ltd at the end of the lease term. The lease has been classified as a finance lease by Sherlock Ltd.
Required:
Prepare:
(a) the lease receipts schedule for Sherlock Ltd (show all workings)
(b) the
please show all workings of lease receipt.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
