PROBLEMS Leases On 1 July 2013, Tasman Ltd contracts to lease equipment for five years at an annual rental of $20 000 with the first payment payable immediately. The equipment could have been purchased from the supplier for $80 747. The rate of interest implicit in the lease is 12% and the end of the … Continue reading “Compak Finance Ltd acquires equipment | My Assignment Tutor”
PROBLEMS Leases On 1 July 2013, Tasman Ltd contracts to lease equipment for five years at an annual rental of $20 000 with the first payment payable immediately. The equipment could have been purchased from the supplier for $80 747. The rate of interest implicit in the lease is 12% and the end of the reporting period is 30 June. Required (a) Prepare general journal entries for the year ended 30 June 2014, assuming the lease is an operating lease. (b) Prepare general journal entries for the year ended 30 June 2014, assuming the lease is a finance lease. (c) Prepare a schedule showing the division of the lease rental into interest and principal components for the first two years. (b) Compak Finance Ltd acquires equipment at a cost of $65 343. On 1 July 2013 it enters a contract to lease this equipment to DRD Ltd for four years at an annual rental of $20 000 with the first payment payable on 30 June 2014. The contract provides for an unguaranteed residual at the end of the lease term of $5000. The rate of interest implicit in the lease is 11% and the end of the reporting period is 30 June. Required (a) Prepare general journal entries in the books of Compak Finance Ltd for the year ended 30 June 2014, assuming the lease is an operating lease. (b) Prepare general journal entries in the books of Compak Finance Ltd for the year ended 30 June 2014, assuming the lease is a finance lease. (c) Prepare a schedule showing the division of the lease rental into interest and principal components. Box Ltd entered into a finance lease with GEC Ltd to obtain the services of a forklift truck. The term of the lease is four years and in return Box Ltd has agreed to make an initial payment of $4000 followed by 47 monthly payments of $2000. The rate of interest charged by the lessor is found to be 1% per month, and the lessor acquired the forklift truck for $78 707. Required (a) Record the lease of the forklift truck, including the initial payment of $4000 and the first lease instalment of $2000, in the books of the lessor. (b) Record the lease of the forklift truck, including the initial payment of $4000 and the first lease instalment of $2000, in the books of the lessee.
