R) please answer asap. Coronado Inc. leased a new crane to Flint Construction Inc. under a six-year, non-cancellable contract starting February 1, 2020. The lease terms require payments of $22,000 each February 1, starting February 1, 2020. Coronado will pay insurance and repair and maintenance charges on the crane, which has an estimated life of 12 years, a fair value of $160,000, and a cost to Coronado of $160,000. The crane's estimated fair value is $50,000 at the end of the lease term. No bargain purchase or renewal options are included in the contract. Both Coronado and Flint have calendar year ends and use IFRS 16. Collectibility of the lease payments is reasonably certain and there are no uncertainties about unreimbursable lessor costs. Flint's incremental borrowing rate is 8% and Coronado' implicit interest rate of 7% is known to Flint. Would the classification of the lease have been different if Coronado and Flint had been using ASPE? Yes
(R) please answer asap.
Coronado Inc. leased a new crane to Flint Construction Inc. under a six-year, non-cancellable contract starting February 1, 2020. The lease terms require payments of $22,000 each February 1, starting February 1, 2020. Coronado will pay insurance and repair and maintenance charges on the crane, which has an estimated life of 12 years, a fair value of $160,000, and a cost to Coronado of $160,000. The crane's estimated fair value is $50,000 at the end of the lease term. No bargain purchase or renewal options are included in the contract. Both Coronado and Flint have calendar year ends and use IFRS 16. Collectibility of the lease payments is reasonably certain and there are no uncertainties about unreimbursable lessor costs. Flint's incremental borrowing rate is 8% and Coronado' implicit interest rate of 7% is known to Flint.
Would the classification of the lease have been different if Coronado and Flint had been using ASPE?
Yes
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