Question 9: On 1 January 20X6 Fellini hired a machine under a finance lease. The cash price of the machine was $3.5 million and the present value of the minimum lease payments was $3.3 million. Instalments of $700,000 are payable annually in advance with the first payment made on 1 January 20X6. The interest rate implicit in the lease is 6%. What amount will appear under non-current liabilities in respect of this lease in the statement of financial position of Fellini at 31 December 20X7? A. $ 1,479,000 B. $2,179,000 C. S 1,702,000 D. $2,266,000

Question 9: On 1 January 20X6 Fellini hired a machine under a finance lease. The cash price of the machine was $3.5 million and the present value of the minimum lease payments was $3.3 million. Instalments of $700,000 are payable annually in advance with the first payment made on 1 January 20X6. The interest rate implicit in the lease is 6%. What amount will appear under non-current liabilities in respect of this lease in the statement of financial position of Fellini at 31 December 20X7? A. $ 1,479,000 B. $2,179,000 C. S 1,702,000 D. $2,266,000

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 1 January 20X6 Fellini hired a machine under a finance lease. The cash price of the machine was $3.5 million and the present value of the minimum lease payments was $3.3 million. Instalments of $700,000 are payable annually in advance with the first payment made on 1 January 20X6. The interest rate implicit in the lease is 6%. What amount will appear under non-current liabilities in respect of this lease in the statement of financial position of Fellini at 31 December 20X7? A $1,479,000 B $2,179,000 C $1,702,000 D $2,266,000
(2) On 1 January 2*19 B Co hired a machine under a five year lease. A non-refundable deposit of $500,000 was payable on 1 January 2*19. The present value of the future lease payments was $1,772,975. The remaining 4 instalments of $500,000 are payable annually in advance. The interest implicit in the lease is 5%. What amount will appear under non-current liabilities in respect of this lease in the statement of financial position of B Co at 31 December 2*19? (Answer to nearest $000) A. $88,649 B. $411,351 C. $1,361,624 D. $500,000 E. None of these answer choices are correct.
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What amount should be included in current liabilities on Dec 31, 2021 in relation to the lease? **see attached pica. 65,000b. 85,000c. 115,000d. 200,000
ok nt ences A finance lease agreement calls for quarterly lease payments of $7,056 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 12%. Both the present value of the lease payments and the cost of the asset to the lessor are $168,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a partial amortization table up to the October 1 payment. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date July 1 July 1 October 1 Lease Payment Effective Interest Decrease in Outstanding balance balance Required B >
Fact pattern On January 1, 2019, Lessee enters into a 4-year lease of an asset for an annual rent of P10,000 payable at the beginning of each year. The interest rate implicit in the lease is 10% while the lessee's incremental borrowing rate is 12%. 9. The initial measurement of the right-of-use asset is determined as follows: P10,000 x PV of an ordinary annuity of P1 @10%, n=4. 10. The initial measurement of the lease liability is determined as follows: P10,000 x PV of an annuity due of P1 @10%, n=4.
7. Chicago leased machines from Brandon on December 31, 2021. The lease is a 10-year lease with annual payments of $158,000 due on December 31 of each year beginning December 31, 2021. The present value of the lease payments is $1,067,926. Chicago's incremental borrowing rate is 12% for this type of lease. The implicit rate of 10% is known by the lessee. What should be the balance in Chicago lease liability at December 31, 2022?
Question 2: Figy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets the definition of a lease in accordance with IFRS 16. An initial payment of $150,000 was made on 1 January 20X5 followed by three annual payments on 1 January of $110,000 each. The rate implicit in the lease is 10%. Figy Co incurred initial direct costs of X2 to set up the lease. Required: 1. Give your own X2 then calculate the cost of the right-of-use asset as at 1 January 20X5? 2. What is the carrying amount of the lease liability at 31 December 20X6? 3. What amount will be charged to the statement of profit or loss in respect of this asset for the year ended at 31 December 20X6? 4. Prepare necessary accounting entries related to this lease agreement for the year ended at 31 December 20X5.