1. What will be the amount to be credited to accumulated depreciation on 31 December 2019?

a.

OMR 3,125

b.

OMR 5,000

c.

OMR 2,500

d.

OMR 6,251

What will be the value of the delivery truck to be recorded on 1 January 2019?

a.

OMR 0

b.

OMR 18,000

c.

OMR 25,000

d.

OMR 31,255

What will be the journal entry to record the lease including the lease payment on 1 January 2019?

a.

Dr. Cash, Cr. Delivery Truck

b.

Dr. Delivery Truck, Cr. Cash and Cr. Lease Liability

c.

Dr. Lease Liability, Cr. Cash and Cr. Delivery Truck

d.

Dr. Delivery Truck, Cr. Cash

Clear my choice

On 1st of January 2019, Sohar SAOG and Salalah SAOC entered into a lease agreement. In the contract, Sohar will lease out a delivery truck to Salalah SAOC to be used in transporting Salalah goods to Sohar. The lease has a 5-year term where Salalah has to make an annual lease payment of OMR 7,000 to Sohar at the beginning of each year. The fair value of the delivery truck is OMR 25,000 and has estimated life of 10 years. The present value of minimum lease payments is OMR 31,255 and the rate of interest in the lease is 6%. Please answer the following questions pertaining to Salalah SAOC (lessee): Questions No. 29, 30 and 31