Barry Limited (lessee) entered into a finance lease agreement with the following terms:

lease term is 4 years

estimated economic life of the leased asset (equipment) is 5 years

Right of use asset amount at the inception was $85,695

Annual lease payments of $30,000 each payable in advance.

residual value at the end of the lease term is $5,000 but no amount was guaranteed by the lessee

Which one of the following is correct for Barry Limited?

Select one:

Depreciation entry;

Dr Depreciation $16,139

Cr Accumulated depreciation $16,139

To record the asset at the inception;

Dr Right of use asset $85,695

Cr Cash $30,000

Cr Equipment $55,695

To record the asset at the inception;

Dr Right of use asset $85,695

Cr Cash $30,000

Cr Lease liability $55,695

Depreciation entry;

Dr Depreciation $20,174

Cr Accumulated depreciation $20,174

2.Abbott Ltd sells goods to Costello Ltd and issues an invoice on 10 August. On that date, Costello Ltd requests that Abbott Ltd delay delivery of the goods until the 25 August when they expect to have finished preparing their site for the goods. The goods can then be delivered on 26 August. Costello Ltd pays for the goods on 12 August and accepts full responsibility for the goods from this payment date. Assuming all other revenue recognition criteria are met, on which date can Abbott Ltd recognise revenue for the sale of these goods?

10 August

25 August

26 August

None of these

12 August

3.Mangrove Limited has a product warranty liability valued at $12000. The product warranty costs are not tax deductible until paid out to customers. The company tax rate is 30%. Which one of the following is correct?

Select one:

None of these

There is a deductible temporary difference of $12000

There is a deferred tax asset of $12 000

There is a taxable temporary difference of $12 000

There is a future deductible amount of $0

4.During the financial year, Cottontree Limited had a cost of sales amounting to $130000. Opening and ending balances of related accounts were:

Opening balanceClosing balance

Inventories $34 000$42 000

Accounts Payable$51 000$56 000

A discount of $4 000 for prompt payment was received.

What would be the amount of cash paid for goods purchased during the year?

Select one:

None of these

$143 000

$130 000

$129 000

$135 000

5.Angus Ltd has provided a bank guarantee to a bank in relation to a loan provided to Brown Ltd. Brown Ltd is solvent and shows no signs of defaulting on the loan. The treatment of the bank guarantee in the records of Angus Ltd is to:

Select one:

recognise a provision

None of these

do nothing

recognise a liability

recognise a contingent liability

Reply me as soon as possible with explaination.