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Assume that Company A leases equipment with a cash cost of 748000 from Company B in terms of a finance lease agreement. Company A has
Assume that Company A leases equipment with a cash cost of 748000 from Company B in terms of a finance lease agreement. Company A has a 31 December year-end. The lease begins on 1 January 20X5. There are 6 instalments of 166744 each, paid annually in arrears and the discount rate (interest rate implicit) is 9%. The company depreciates equipment at 25% per annum on the straight-line basis to a nil residual value. Required: Prepare the journal entries for 20X5 in Company As books.
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