Question
Aqua Co makes up its accounts to 31 December each year. It enters into a lease (as a lessee) to lease an item of equipment
Aqua Co makes up its accounts to 31 December each year. It enters into a lease (as a lessee) to lease an item of equipment with the following terms:
Inception of lease: 1 January 20X1
Term: Five years: $2,000 paid at commencement of lease, followed by four payments of $2,000 payable at the start of each subsequent year
Fair value: $8,000
Present value of future lease payments: $6,075
Useful life: Eight years
Interest rate implicit in the lease: 12%
Required Show how should this lease should be accounted for in Aqua Co's statement of financial position as at 31 December 20X1
Aqua Co makes up its accounts to 31 December each year. It enters into a lease (as a lessee) to lease an item of equipment with the following terms:
Inception of lease: 1 January 20X1
Term: Five years: $2,000 paid at commencement of lease, followed by four payments of $2,000 payable at the start of each subsequent year
Fair value: $8,000
Present value of future lease payments: $6,075
Useful life: Eight years
Interest rate implicit in the lease: 12%
Required Show how should this lease should be accounted for in Aqua Co's statement of financial position as at 31 December 20X1
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