On 1 July 2023, Station Ltd leased machinery to Depot Ltd. The machinery was purchased by Station Ltd on 1 July 2023 for its fair value of $233,556. The lease agreement contained the following provisions: Lease term 3 years Economic life of machinery 5 years Annual rental payment, in arrears (commencing 30/6/2024) $75,000 Residual value at end of the lease term $45,000 Residual guaranteed by lessee $30,000 Interest rate implicit in lease 7% Depot Ltd incurred $1 200 in costs to negotiate the lease arrangement. Depot Ltd intends to return the machinery to the lessor at the end of the lease term. The reporting period ends 30 June. Required: Prepare a lease payment schedule for Depot Ltd. Prepare the journal entries for 1 July 2023 and 30 June 2024.
On 1 July 2023, Station Ltd leased machinery to Depot Ltd. The machinery was purchased by Station Ltd on 1 July 2023 for its fair value of $233,556. The lease agreement contained the following provisions:
|
Lease term |
3 years |
|
Economic life of machinery |
5 years |
|
Annual rental payment, in arrears (commencing 30/6/2024) |
$75,000 |
|
Residual value at end of the lease term |
$45,000 |
|
Residual guaranteed by lessee |
$30,000 |
|
Interest rate implicit in lease |
7% |
Depot Ltd incurred $1 200 in costs to negotiate the lease arrangement. Depot Ltd intends to return the machinery to the lessor at the end of the lease term. The reporting period ends 30 June.
Required:
Prepare a lease payment schedule for Depot Ltd.
Prepare the
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