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On January 1, 2024, Oriole Ltd., which uses IFRS, entered into an eight-year lease agreement for a conveyor machine. Annual le payments are $22,200 at the beginning of each lease year, which ends December 31, and Oriole made the first payment on Janu 2024. At the end of the lease, the machine will revert to the lessor. However, conveyor machines are expected to last for only ei years and have no residual value. At the time of the lease agreement, conveyor machines could be purchased for $125,000 cash Equivalent financing for the machine could have been obtained from Oriole's bank at 12%. Oriole's fiscal year coincides with the calendar year. Oriole uses straight-line depreciation for its conveyor machines. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

On January 1, 2024, Oriole Ltd., which uses IFRS, entered into an eight-year lease agreement for a conveyor machine. Annual le payments are $22,200 at the beginning of each lease year, which ends December 31, and Oriole made the first payment on Janu 2024. At the end of the lease, the machine will revert to the lessor. However, conveyor machines are expected to last for only ei years and have no residual value. At the time of the lease agreement, conveyor machines could be purchased for $125,000 cash Equivalent financing for the machine could have been obtained from Oriole's bank at 12%. Oriole's fiscal year coincides with the calendar year. Oriole uses straight-line depreciation for its conveyor machines. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

FINANCIAL ACCOUNTING
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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On January 1, 2024, Oriole Ltd., which uses IFRS, entered into an eight-year lease agreement for a conveyor machine. Annual lease payments are $22,200 at the beginning of each lease year, which ends December 31, and Oriole made the first payment on January 1, 2024. At the end of the lease, the machine will revert to the lessor. However, conveyor machines are expected to last for only eight years and have no residual value. At the time of the lease agreement, conveyor machines could be purchased for $125,000 cash. Equivalent financing for the machine could have been obtained from Oriole's bank at 12%. Oriole's fiscal year coincides with the calendar year. Oriole uses straight-line depreciation for its conveyor machines. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. (a) Your answer is correct. Calculate the PV of the minimum lease payments using (1) a financial calculator or (2) Excel functions. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 1,452.) Present value of the minimum lease payments $ late Prepare an amortization schedule for the term of the lease to be used by Oriole. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round answers to O decimal places, e.g. 1,452.) 1, 2024 1, 2025 1, 2026 1, 2027 1, 2028 1, 2029 1, 2030 1, 2031 $ $ Annual Lease Payments 22200 22200 $ $ 123515 ORIOLE LTD. Lease Amortization Schedule (Lessee) Interest on Unpaid Liability 0 14822 $ Reduction of Lease Liability 22200 Balance o Lease Liabil
Transcribed Image Text:On January 1, 2024, Oriole Ltd., which uses IFRS, entered into an eight-year lease agreement for a conveyor machine. Annual lease payments are $22,200 at the beginning of each lease year, which ends December 31, and Oriole made the first payment on January 1, 2024. At the end of the lease, the machine will revert to the lessor. However, conveyor machines are expected to last for only eight years and have no residual value. At the time of the lease agreement, conveyor machines could be purchased for $125,000 cash. Equivalent financing for the machine could have been obtained from Oriole's bank at 12%. Oriole's fiscal year coincides with the calendar year. Oriole uses straight-line depreciation for its conveyor machines. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. (a) Your answer is correct. Calculate the PV of the minimum lease payments using (1) a financial calculator or (2) Excel functions. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 1,452.) Present value of the minimum lease payments $ late Prepare an amortization schedule for the term of the lease to be used by Oriole. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round answers to O decimal places, e.g. 1,452.) 1, 2024 1, 2025 1, 2026 1, 2027 1, 2028 1, 2029 1, 2030 1, 2031 $ $ Annual Lease Payments 22200 22200 $ $ 123515 ORIOLE LTD. Lease Amortization Schedule (Lessee) Interest on Unpaid Liability 0 14822 $ Reduction of Lease Liability 22200 Balance o Lease Liabil
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