Concord Inc. leased a new crane to Bridgeport Construction Inc. under a six$-$year, non$-$cancellable contract starting February $1,2023.$ The lease terms require payments of $$20,500$ each February $1,$ starting February $1,2023.$ Concord will pay insurance and repair and maintenance charges on the crane, which has an estimated life of $12$ years, a fair value of $$160,000,$ and a cost to Concord of $$160,000.$ The crane's estimated fair value is $$50,000$ at the end of the lease term. No bargain purchase or renewal options are included in the contract. Both Concord and Bridgeport have calendar year ends and use IFRS. Collectibility of the lease payments is reasonably certain and there are no uncertainties about unreimbursable lessor costs. Bridgeport's incremental borrowing rate is $8\%$ and Concord's implicit interest rate of $7\%$ is known to Bridgeport. $($Hint: Use a financial calculator or Excel function to arrive at the present value of the lease.$)$

$($b$)$

Your answer is correct.

Would the classification of the lease have been different if Concord and Bridgeport had been using ASPE?

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Attempts: $1$ of $3$ used

$($c$)$

Prepare all the entries related to the lease contract and leased asset for the year $2023$ for the lessee and lessor, assuming the following executory costs: insurance of $$450$ covering the period February $1,2023,$ to January $31,2024,$ and a one$-$year maintenance contract beginning February $1,2023,$ costing $$1,220.$ Straight$-$line depreciation is used for similar leased assets. The crane is expected to have a residual value of $$21,000$ at the end of its useful life. $($List all debit entries before credit entries. 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. Round answers to $0$ decimal places, e$.$g$.5,275.)$

Lessee's Entries

Date

Account Titles and Explanation

Debit