Brief Exercise 20-2

Pharoah Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of its office locations. Pharoah leased 53 machines from Coffee Tyme Ltd. on July 1, 2020. (To purchase the coffee machines instead would have cost Pharoah $371 per machine, and the machines would have lasted an estimated five years.) The lease calls for semi-annual payments for the next three years, in the amount of $36 per machine. The payments start on July 1, 2020. At the end of the three-year period, the machines will have to be returned to the lessor.

Prepare the entry for the first payment on July 1, 2020.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

July 1

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

Would your entry for the first payment differ if Pharoah followed ASPE?

The entry

select an option

would bewould not be

the same under ASPE.