the table, journal entries and slight expalnations
Leased asset
Operating lease contract under IFRS 16
Carsons Ltd entered into the following lease agreement on the 1 January 2020:
To produce a new foiled Christmas product, a new printing and folding machine was leased and received on 1 January 2020. The plant is held within the main warehouse operated by the company and required a complex installation that was completed and settled on 1 January 2020 at a cost of £35,000.
The new plant is to be leased for 7 years at an annual rental payment of £350,000, payable on 31 December of each year. To delay receipt of the plant until 1 January 2020, the lessor paid a £20,000 incentive to Carsons Ltd which was received on 1 January 2020.
The implicit rate of the lease is 8%.
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