Sheridan Company leased an office under a six-year contract, which has been accounted for as an operating lease. Faced with the downturn in the economy, the viable company decided to sub-lease the office. However, they have had no luck with this effort and the landlord will not allow the lease to be cancelled. The payments are $29000 per year and there are five years left on the lease. The company's most recent interest rate for financing from a bank is 11%. The risk-free rate on government bonds is 7%. What is the provision for the lease under IFRS?

Sheridan Company leased an office under a six-year contract, which has been accounted for as an operating lease. Faced with the downturn in the economy, the viable company decided to sub-lease the office. However, they have had no luck with this effort and the landlord will not allow the lease to be cancelled. The payments are $29000 per year and there are five years left on the lease. The company's most recent interest rate for financing from a bank is 11%. The risk-free rate on government bonds is 7%. What is the provision for the lease under IFRS?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 3P

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