1. The following facts are for a non-cancellable lease agreement between Oriole Corporation and Russell Corporation, a lessee:

Inception date		July 1, 2020
Annual lease payment due at the beginning of each year, starting July 1, 2020		$	20,954.73
Bargain purchase option price at end of lease term reasonably certain to be exercised by Russell		$	3,900.00
Lease term			5 years
Economic life of leased equipment			10 years
Lessors cost		$	43,800.00
Fair value of asset at July 1, 2020		$	89,800.00
Lessors implicit rate			10%
Lessees incremental borrowing rate			10%

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. The lessee assumes responsibility for all executory costs. Both Russell and Oriole use IFRS 16.

Calculate the amount of the right-of-use asset and lease liability. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75.)

Amount

$enter a dollar amount

Prepare a lease amortization schedule for the lease obligation using a computer spreadsheet for Russell Corporation for the five-year lease term. (Round answers to 2 decimal places, e.g. 52.75.)

Russell Corporation (Lessee) Lease Amortization Schedule
Date		Annual Lease Payment Plus BPO		Interest (10%) on Unpaid Obligation		Reduction of Lease Obligation		Balance of Lease Obligation
7/1/20								$enter a dollar amount
7/1/20		$enter a dollar amount				$enter a dollar amount		enter a dollar amount
7/1/21		enter a dollar amount		$enter a dollar amount		enter a dollar amount		enter a dollar amount
7/1/22		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
7/1/23		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
7/1/24		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
6/30/25		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount

Prepare the journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Russells annual accounting period ends on December 31, and Russell does not use reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)

Date	Account Titles and Explanation	Debit	Credit
7/1/20	enter an account title to record inception and payment of lease	enter a debit amount	enter a credit amount
	enter an account title to record inception and payment of lease	enter a debit amount	enter a credit amount
	enter an account title to record inception and payment of lease	enter a debit amount	enter a credit amount
	(To record inception and payment of lease.)
12/31/20	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
12/31/20	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	(To record depreciation expense.)
7/1/2021	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	(To record lease payment.)
12/31/2021	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
12/31/2021	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	(To record depreciation expense.)

2. Crane Ltd., a public company following IFRS 16, recently signed a lease for equipment from Costner Ltd. The lease term is 6 years and requires equal rental payments of $18,893 at the beginning of each year. The equipment has a fair value at the leases inception of $103,000, an estimated useful life of 6 years, and no residual value. Crane pays all executory costs directly to third parties. The appropriate interest rate is 4%. Using tables, a financial calculator, or Excel functions, calculate the amount of the right-of-use asset and lease liability. Prepare the initial entry to reflect the signing of the lease agreement and the first payment under the lease. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount