Question
David Lld enters into a five-year lease agreement with Brothers Ltd on 1 July 2023 for an tem of machinery. There is a bargain purchase
David Lld enters into a five-year lease agreement with Brothers Ltd on 1 July 2023 for an tem of machinery. There is a bargain purchase option that David Lid will be willing to exercise at the end of the fifth year for $90 000 The machinery is expected to have a useful life of six years There are to be five annual payments of $110 000, the first being made on 30 June 2024. Included within these payments is $10 000 representing payment to the lessor for insurance and maintenance of the equipment. Additional information Implicat interest rate: 10 per cent Present value of an annuity in arrears of $1 for five years at 10 per cent = ? Present value of $1 in five years at 10 per cent =? Required (c) Prepare a lease payment schedule. (6 marks) (d) Provide the accounting journal entries for the year ended 30 June 2024. (3 marks)
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