On 1 July 2021, Croydon Ltd leased ten excavators for five years from Machines4U Ltd. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 July 2021, Croydon Ltd leased ten excavators for five years from Machines4U Ltd. The excavators are expected to have an economic life of 6 years, after which time they will have an expected combined residual value of $30,000. Net initial directly attributable cost incurred by Croydon Ltd were $10,000. There is a bargain purchase option that Croydon will be able to exercise at the end of the fifth year to acquire all ten excavators for $40,000. It is expected that Croydon will exercise this option. The implicit interest rate in the lease is 12%. There are five annual payments of $45,000, the first being made on 30 June 2022. The machine is to be depreciated on a straight-line basis. Required (Show any necessary calculations and round your answers to the nearest whole dollar): O Prepare all relevant journal entries for Croydon Ltd in relation to the lease transaction for the year ended 30 June 2022 (first year of lease). (4 marks) (1) Prepare the balance sheet relating to the leased asset and lease liability for the year ended 30 June 2023. Ignore the impact on Cash. (2 marks) Sunlight Ltd Balance Sheet as at 30 June 2023 (Extract) Current Assets Non-current Assets Current Liabilities Non-current Liabilities On 1 July 2021, Croydon Ltd leased ten excavators for five years from Machines4U Ltd. The excavators are expected to have an economic life of 6 years, after which time they will have an expected combined residual value of $30,000. Net initial directly attributable cost incurred by Croydon Ltd were $10,000. There is a bargain purchase option that Croydon will be able to exercise at the end of the fifth year to acquire all ten excavators for $40,000. It is expected that Croydon will exercise this option. The implicit interest rate in the lease is 12%. There are five annual payments of $45,000, the first being made on 30 June 2022. The machine is to be depreciated on a straight-line basis. Required (Show any necessary calculations and round your answers to the nearest whole dollar): O Prepare all relevant journal entries for Croydon Ltd in relation to the lease transaction for the year ended 30 June 2022 (first year of lease). (4 marks) (1) Prepare the balance sheet relating to the leased asset and lease liability for the year ended 30 June 2023. Ignore the impact on Cash. (2 marks) Sunlight Ltd Balance Sheet as at 30 June 2023 (Extract) Current Assets Non-current Assets Current Liabilities Non-current Liabilities
Expert Answer:
Answer rating: 100% (QA)
i D Working statement D is not correct because whether lease is cancelable or not the present value of minimum lease payments for the purpose of lease ... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Which of these compounds are expected to have an absorption maximum in the region of 200 to 400nm in their UV spectra? ) C-CH,CH, b) CH,CH,CH3 c) d) f) CH,CH,OCH,CH3 e) h) g)
-
On 1 July 2021 Garden Ltd acquires 70 per cent of the equity capital of Richards Ltd at a cost of $4 million. At the date of acquisition all assets of Richards Ltd are fairly stated, and the total...
-
Swan Ltd purchased vintage equipment on 1 July 2021 for $119 400 cash. Transport and installation costs of $12 600 were paid on 5 July 2021. Useful life and residual value were estimated to be 10...
-
Net sales revenue, net income, and common stockholders' equity for Vallen Optical Corporation, a manufacturer of contact lenses, follow for a four-year period. Requirements 1. Compute trend...
-
What is a CROSS JOIN? Give an example of its syntax.
-
ances Rundle Manufacturing Company was started on January 1, 2018, when it acquired $76,000 cash by Issuing common stock. Rundle Immediately purchased office furniture and manufacturing equipment...
-
Survey the effect of the international art market and tourism on art.
-
You landed a summer internship with a company that processes dental insurance claims for insurance companies. The company receives the insurance claims from dental offices, achieves authorization...
-
A. The Owner is the owner of a building at 67-70 Funnel Parade, Peregian Springs, Qld, 4573 which comprises 350 lots under the Body Corporate and Community Management Act 1997 (Qld). B. The Owner...
-
You are the brand manager for your favorite brand of clothing, food, vehicle, or other consumer product. Write a one-page branding statement summarizing your brand for your company's VP of Marketing....
-
"What is pseudo parallelism, and how does the process model designed to facilitate parallelism ease its management?"
-
The coordination of, or the review of, the delivery of services or products by other service providers is part of: A. Implementation engagement. B. Monitoring engagement. C. PFP engagement. D....
-
Explain how mass customisation works.
-
With regards to a PFP engagement, if a member determines that a conflict of interest exists, which of the following is correct? A. The member can engage the prospective client if objectivity is not...
-
Are logistics and SCM only of interest to manufacturers?
-
A member lists CPA/PFS credentials on business cards and the company website. Which of the following activities is not covered by SSPFPS No. 1? A. Advising a client regarding income tax matters that...
-
Thermal Load Analysis A contract to design a centralised air-conditioning system for a school located in a remote area. The school will accommodate 700 persons. The air-conditioning system will be...
-
Determine by direct integration the values of x for the two volumes obtained by passing a vertical cutting plane through the given shape of Fig. 5.21. The cutting plane is parallel to the base of the...
-
Show the products of thesereactions: + HCI b) + HF + HI CH3 + HBr CH3 + HCI CH,CH, (p)
-
Explain why this carbocation is considerably more stable than this structure would suggest: H +C-0-CH, H
-
Draw all of the stereo isomers for 2, 3-dichlorobutane. Indicate which rotate plane-polarized light and which are meso.
-
A rare book library at a University of England in England houses first edition (FE), original manuscript (OM), and authors journals (AJ). Some of these rare books are worth hundreds of thousands of...
-
Jasmine Minoza, the chief information officer of a Canada- based designer of video games, Adventure Gaming, Inc. (AGI), is considering outsourcing her companys software development activities to...
-
Rosa Dominguez, the owner of Elegant Dining in San Jose, California, is pondering whether to buy electronic menu technology and tablets for her five-star restaurant. Prices for a typical four course...
Study smarter with the SolutionInn App