A company that follows IFRS entered into two lease agreements for the acquisition of equipment during 20x8: Lease 1 Date of lease inception and first lease payment FV of equipment Lease term Useful life Residual value: - end of lease term - end of useful life Interest rate implicit in lease Jan 2, 20x8 $150,000 8 years 10 years Unguaranteed $15,000 $10,000 5% Lease 2 July 1, 20x8 $90,000 4 years 8 years Date of lease inception and first lease payment FV of equipment Lease term Useful life Residual value: - end of lease term - end of useful life Interest rate implicit in lease Annual maintenance costs payable on July 1 of each year Estimate of fair value of asset at the end of the lease term Guaranteed $25,000 $9,000 7% $4,000 $12,000 Lease payments made under each of these leases were debited to Administrative expenses. No other entries were made for the leases. For both leases, the lessor took into account the residual value at the end of the lease term when calculating the lease payments. 2 Required - For each of the leases - a) Prepare the adjusting journal entries at December 31, 20x8 for each of the two lease agreements. Prepare the journal entries for the year ended December 31, 20x9. Assume ASPE. Redo parts (a) and (b) for both leases. b) C) A company that follows IFRS entered into two lease agreements for the acquisition of equipment during 20x8: Lease 1 Date of lease inception and first lease payment FV of equipment Lease term Useful life Residual value: - end of lease term - end of useful life Interest rate implicit in lease Jan 2, 20x8 $150,000 8 years 10 years Unguaranteed $15,000 $10,000 5% Lease 2 July 1, 20x8 $90,000 4 years 8 years Date of lease inception and first lease payment FV of equipment Lease term Useful life Residual value: - end of lease term - end of useful life Interest rate implicit in lease Annual maintenance costs payable on July 1 of each year Estimate of fair value of asset at the end of the lease term Guaranteed $25,000 $9,000 7% $4,000 $12,000 Lease payments made under each of these leases were debited to Administrative expenses. No other entries were made for the leases. For both leases, the lessor took into account the residual value at the end of the lease term when calculating the lease payments. 2 Required - For each of the leases - a) Prepare the adjusting journal entries at December 31, 20x8 for each of the two lease agreements. Prepare the journal entries for the year ended December 31, 20x9. Assume ASPE. Redo parts (a) and (b) for both leases. b) C)
