On January 1, 2013, Gloss Limited signed off on a leasing contract with MR Stationery to lease a photocopier. These detail relate to the lease contract. The cost of the photocopier is $525,000 and the fair value of the equipment on January 1 2013 is $700,000. The term of the lease is 7 years with no option to renew and the photocopier has an estimated useful life of 9 years At the end of the lease term, the photocopier must be returned to Gloss Limited. It has a guaranteed residual value of $50,000. MR Stationery uses the straight line method of depreciation The lease agreement is annual rental payments beginning January 1 2013 Boss Limited desires a 5% rate of return, which is known to MR. MR Stationery’s incremental borrowing rate is 7%. Requirements: the financial year ends on December 31 explain the nature of the lease for the lessee using the 5 criteria, prepare the lease schedule for the lessee, prepare the necessary journal entries for January 1 2013 and Dec 31 2013
On January 1, 2013, Gloss Limited signed off on a leasing contract with MR Stationery to lease a photocopier. These detail relate to the lease contract.
The cost of the photocopier is $525,000 and the fair value of the equipment on January 1 2013 is $700,000.
The term of the lease is 7 years with no option to renew and the photocopier has an estimated useful life of 9 years
At the end of the lease term, the photocopier must be returned to Gloss Limited. It has a guaranteed residual value of $50,000. MR Stationery uses the
The lease agreement is annual rental payments beginning January 1 2013
Boss Limited desires a 5%
Requirements: the financial year ends on December 31
explain the nature of the lease for the lessee using the 5 criteria, prepare the lease schedule for the lessee, prepare the necessary
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