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Burt Ltd enters into a non-cancellable 5 year lease agreement with Earnie Ltd on 1 July 2023. The lease is for an item of machinery

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Burt Ltd enters into a non-cancellable 5 year lease agreement with Earnie Ltd on 1 July 2023. The lease is for an item of machinery that, at the inception of the lease, has a fair value of $1384479.The machinery is expected to have an economic life of 8 years, after which time it will have an expected residual value of $280000. There is a bargain purchase option that Burt Ltd will be able to exercise at the end of the 5th year for $290000. There are to be five annual payments of $400000, the first being made on 30 June 2024. Included within the $400000 lease payments is an amount of $40000 representing payment to the lessor for the insurance and maintenance of the equipment. The equipment is to be depreciated on a straight-line basis. REQUIRED (a) Determine the rate of interest implicit in the lease and calculate the present value of the minimum lease payments. (b) Prepare the journal entries in the books of Burt Ltd for the years ending 30 June 2016 and 30 June 2017. (c) Prepare the portion of the statement of financial position for the year ending 30 June 2017 relating to the lease asset and lease liability. (d) Prepare the journal entries of Burt Ltd for the years ending 30 June 2016 and 30 June 2017 assuming that Burt Ltd classifies the lease as an operating lease.

Tracksuits Manufa... S Visit Safety Expo Confe... Contact Bydand... New Tab Register - Visitor... Who Visits Continuous Assessment - Accounting Theory and Current Issues Question 1.2 ina+ t > Enter amount Enter amount memb v BBHel Enter amount V Enter amount any iss > Enter amount mtuinta Enter amount groups Enter amount Enter amount Studen a link t 30th June 2025 and use Debit/Credit Description Debit Amount Credit Amount can st assessm Enter amount Enter amount (providin Enter amount Enter amount space assessm Entamoenter amount er amount Fina Assic Eleone Thur Completed o Remaining 5 Need Review O Notific Assess ent- nd c) Prepare the portion of the statement of financial position for the year ending 30 June 2024 and 2025 relating to the lease asset and lease liability. This is should Assets member Description 30th June 2024 30th June 2025 1.5 BBHelpc Non-current Assets any issu groups. v Enter amount Enter amount Students V Enter amount Enter amount a link to and userr Liabilities can star Description 30th June 2024 30th June 2025 assessme (providing Current Liabilities space pro Lease Liability Enter amount Enter amount assessment Non-current Liabilities Finals Lease Liability Enter amount Enter amount Assign Thursa Finish Needs review Next Notifica: Completed o Remaining 5 Need Review o MacBook AS Enter amou Enter amou V Enter amou Enter amou 30th June 2024 Debit/Credit Description Debit Amount Credit Amount Enter amount Enter amount v Enter amount Enter amount Interest Expense Lease Liability Service Expenses Cash Depreciation Expense Accumulated Depreciation Enter amount Enter amount Enter amount Enter amount Enter amount Enter amount V roter amoun Enter amount soth June 2025 Debit/Credit Description Debit Amount Credit Amount Tracksuits Manufa... S Visit Safety Expo Confe... Contact Bydand... New Tab Register - Visitor... Who Visits Continuous Assessment - Accounting Theory and Current Issues Question 1.2 ina+ t > Enter amount Enter amount memb v BBHel Enter amount V Enter amount any iss > Enter amount mtuinta Enter amount groups Enter amount Enter amount Studen a link t 30th June 2025 and use Debit/Credit Description Debit Amount Credit Amount can st assessm Enter amount Enter amount (providin Enter amount Enter amount space assessm Entamoenter amount er amount Fina Assic Eleone Thur Completed o Remaining 5 Need Review O Notific Assess ent- nd c) Prepare the portion of the statement of financial position for the year ending 30 June 2024 and 2025 relating to the lease asset and lease liability. This is should Assets member Description 30th June 2024 30th June 2025 1.5 BBHelpc Non-current Assets any issu groups. v Enter amount Enter amount Students V Enter amount Enter amount a link to and userr Liabilities can star Description 30th June 2024 30th June 2025 assessme (providing Current Liabilities space pro Lease Liability Enter amount Enter amount assessment Non-current Liabilities Finals Lease Liability Enter amount Enter amount Assign Thursa Finish Needs review Next Notifica: Completed o Remaining 5 Need Review o MacBook AS Enter amou Enter amou V Enter amou Enter amou 30th June 2024 Debit/Credit Description Debit Amount Credit Amount Enter amount Enter amount v Enter amount Enter amount Interest Expense Lease Liability Service Expenses Cash Depreciation Expense Accumulated Depreciation Enter amount Enter amount Enter amount Enter amount Enter amount Enter amount V roter amoun Enter amount soth June 2025 Debit/Credit Description Debit Amount Credit Amount

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