plZ urgently sir AccountingOn January 1, 2020, Sunland Ltd, entered intoan agreement to lease a truck from Ayayai Ltd.Both Sunland and Ayayai use IFRS 16. Thedetails of the agreement are as follows:$22,785Carrying value of truck for AyayaiLtd.Fair value of truck$22,785Economic life of truck5 yearsLease term3 yearsRental payments (at beginning ofeach month)$685Executory costs included in rentalpayments each month forinsurance$15Incremental borrowing rate forSunland Ltd.12%Sunland Ltd. expects to payAyayai Ltd. $3,450 under aresidual value guarantee for thetruck.Additional information:There are no abnormal risks associatedwith the collection of lease paymentsfrom Sunland.1.2.There are no additionalunreimbursable costs to be incurred byAyayai in connection with the leasedtruck.3.At the end of the lease term, Ayayaisold the truck to a third party for$3,100, which was the truck's fair valueat December 31, 2022. Sunland paidAyayai the difference between thequaranteed residual value of $3,450and the proceeds obtained on theresale.4.Sunland knows the interest rate that isimplicit in the lease.Sunland knows the amount ofecutory costs included in theminimum lease payments.5.6.Sunland uses straight-line depreciationfor its trucks with the residual valueguarantee of $3,450 for the leasedtruck.Prepare the journal entries that Ayayai wouldmake on January 1, 2020, and the adjustingjournal entries at December 31, 2020, to recordthe annual interest income from the leasearrangement, assuming that Ayayai has aDecember 31 fiscal year end. (Credit accounttitles are automatically indented when theamount is entered. Do not indent manually. Ifno entry is required, select "No Entry" for theaccount titles and enter 0 for the amounts.Round answers to 0 decimal places, e.g. 5,275.)

Carrying Value of Truck $ 22,785 Fair Value of Truck $ 22,785 Economic…

Prepare the journal entries that Ayayai would make on January 1, 2020, and the adjusting journal entries at December 31, 2020, to record the annual interest income from the lease arrangement, assuming that Ayayai has a December 31 fiscal year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If

Prepare the journal entries that Ayayai would make on January 1, 2020, and the adjusting journal entries at December 31, 2020, to record the annual interest income from the lease arrangement, assuming that Ayayai has a December 31 fiscal year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If

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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