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Help me pls for this problem under IFRS 16 COMPREHENSIVE PROBLEMS On July 1, 2018, Cavanaugh Inc., leased office space under a 10-year lease agreement
Help me pls for this problem under IFRS 16
COMPREHENSIVE PROBLEMS On July 1, 2018, Cavanaugh Inc., leased office space under a 10-year lease agreement to Donovan Corp. The details of the agreement are as follows: 1. 1. The office space is expected to have a residual value at the end of the lease of $3.500,00o (unguaranteed). 2. The leased office space has a cost of $4,000,000 and was purchased for cash on July 1, 2018 3. The office space is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 4. Lease payments are $275,000 per year and are made on July 1 of each year. 5, Donovan has an incremental borrowing rate of 8%, and the rate implicit in the lease is unknown to Donovan 6. Both the lessor and the lessee are on a calendar-year basis Required (a) Prepare the journal entries that Cavanaugh should make in 2018 and 2019 (b) Prepare the journal entries that Donovan should make in 2018 and 2019 (c) If Donovan paid $30,o00 to a real estate broker on July 1, 2018, as a fee for finding the lessor, how much should Donovan report as an expense for this item in 2018Step by Step Solution
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