Plum Ltd. entered into four separate contracts to lease new equipment to Grape Co. during the year ended December 31, Year 1. Plum prepares its financial statements under IFRS. The details of the leases are described below: Lease number Title passes ВРО Useful life of equipment Lease term FV of equipment Lessee's incremental borrowing rate Implicit rate in lease Annual fixed payments, January 1, at beginning of lease term (rounded) Residual, guaranteed, end of lease term, expected to be paid out in 1 2 No No 10 years 3 years $120,000 12% 10% $17,547 No No 7 years 5 years $55,000 12% No Yes, $1,000 9 years в уеars $150,000 12% 10% $31,192 4 No No 9 years 8 years $115,000 12% 10% $19,199 10% $13,190 No No No $5,000

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Chapter1: Financial Statements And Business Decisions
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Plum Ltd. entered into four separate contracts to lease new equipment to Grape Co.
during the year ended December 31, Year 1. Plum prepares its financial statements
under IFRS. The details of the leases are described below:
2
Lease number
Title passes
ВРО
Useful life of equipment
Lease term
FV of equipment
Lessee's incremental borrowing rate
Implicit rate in lease
Annual fixed payments, January 1,
at beginning of lease term (rounded)
Residual, guaranteed, end of lease
term, expected to be paid out in
cash
Specialized asset
Credit risk
1
4
No
No
No
No
No
10 years
3 years
$120,000
12%
Yes, $1,000
9 years
6 years
$150,000
12%
No
No
7 years
5 years
$55,000
12%
9 years
8 years
$115,000
12%
10%
10%
10%
$31,192
10%
$17,547
$13,190
$19,199
No
No
No
$5,000
No
Normal
No
No
Yes
Normal
Normal
Normal
Required:
Classify each of the four leases as an operating lease or a finance lease from the
perspective of Plum (the lessor).
Transcribed Image Text:Plum Ltd. entered into four separate contracts to lease new equipment to Grape Co. during the year ended December 31, Year 1. Plum prepares its financial statements under IFRS. The details of the leases are described below: 2 Lease number Title passes ВРО Useful life of equipment Lease term FV of equipment Lessee's incremental borrowing rate Implicit rate in lease Annual fixed payments, January 1, at beginning of lease term (rounded) Residual, guaranteed, end of lease term, expected to be paid out in cash Specialized asset Credit risk 1 4 No No No No No 10 years 3 years $120,000 12% Yes, $1,000 9 years 6 years $150,000 12% No No 7 years 5 years $55,000 12% 9 years 8 years $115,000 12% 10% 10% 10% $31,192 10% $17,547 $13,190 $19,199 No No No $5,000 No Normal No No Yes Normal Normal Normal Required: Classify each of the four leases as an operating lease or a finance lease from the perspective of Plum (the lessor).
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