On 1 July 2010 A Ltd entered into a leasing arrangement with B Ltd. The lease agreement included the following provisions: • Lease term 4 years • Annual payment, in advance on 1 July each year $10 000 • Residual value at end of the lease term $2 000 • Residual guaranteed by the lessee $2 00O • Amount of residual value guarantee expected to be payable by the lessee at the end of the lease term is $200 • Interest rate implicit in the lease is 7% • The lease is a finance lease • Expected useful life of the machine 6 years • Residual value at end of useful life is $500 • Initial direct costs of the lessee is $1 000 • Initial direct costs of the lessor are $1500 • The machine will be returned to B Ltd at the end of the lease term The amount recognised by A Ltd as depreciation expense for the year ended 30 June 2011 would be: Group of answer choices $9,299 $9,349 $9,099 $6,149

On 1 July 2010 A Ltd entered into a leasing arrangement with B Ltd. The lease agreement included the following provisions: • Lease term 4 years • Annual payment, in advance on 1 July each year $10 000 • Residual value at end of the lease term $2 000 • Residual guaranteed by the lessee $2 00O • Amount of residual value guarantee expected to be payable by the lessee at the end of the lease term is $200 • Interest rate implicit in the lease is 7% • The lease is a finance lease • Expected useful life of the machine 6 years • Residual value at end of useful life is $500 • Initial direct costs of the lessee is $1 000 • Initial direct costs of the lessor are $1500 • The machine will be returned to B Ltd at the end of the lease term The amount recognised by A Ltd as depreciation expense for the year ended 30 June 2011 would be: Group of answer choices $9,299 $9,349 $9,099 $6,149

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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