Common Shares
Net investment in lease
Depreciation Expense Lease Equipment
Depreciation Expense ROU Asset
Equipment Acquired for Lesee
Leased Equipment

QUESTION DATA: Wong Inc., the lessee entered into a lease on July 1, 2020 with Pomerleau Corp. Both companies are public corporations following IFRS. The lease is for a large auger that will be used on a construction site. Other relevant information is as follows: (1). The term of the lease for the auger is six months with a monthly cost of $2,500 per month beginning July 1, 2020. Wong pays all costs through electronic bank withdrawal (cash). (2). Pomerleau offered Wong the opportunity to purchase the auger for $36,500. Wong chose to lease instead. (3). The useful life of the auger is 3 years with no residual value. (4). The stated interest rate for comparable leases is 6%. REQUIRED: (1). What kind of lease is this to Wong Inc.? Use the drop-down box to select the kind of lease. Provide an explanation to support your conclusion in the blue box provided. This is a(n) to Wong Inc. Explanation: Debit Credit (2). Prepare the journal entry for Wong Inc. on July 1, 2020. Date Account Title Jul. 1/20 Accounts Payable Accounts Receivable Accumulated Depreciation - Leased equipment Accumulated Depreciation - ROU Asset Cash