Brief Exercise 20-5

Pharoah Corporation recently needed to find temporary inventory storage space when transitioning from an old factory to a newly built factory within the same city. Pharoah signed a 10-month lease on a warehouse requiring monthly payments in advance of $18,500.

What is the nature of the lease assuming Pharoah follows IFRS 16?

Pharoah should classify the lease asselect a nature of the leasea finance leasearight-of-use assetan operating lease

.

Prepare the entry for the first payment on May 1, 2020.(Credit account titles are automatically indented when the amount is entered.Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

May 1, 2020

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

Prepare the entry for the first payment on May 1, 2020. Assume Pharoah followed ASPE.(Credit account titles are automatically indented when the amount is entered.Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

May 1, 2020

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount