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Lease Q-6 WIN Ltd. has entered into a three year lease arrangement with Tanya sports club in respect of Fitness Equipments costing 16,99,999.50. The annual
Lease
Q-6 WIN Ltd. has entered into a three year lease arrangement with Tanya sports club in respect of Fitness Equipments costing 16,99,999.50. The annual lease payments to be made at the end of each year are structured in such a way that the sum of the Present Values of the lease payments and that of the residual value together equal the cost of the equipments leased out. The unguaranteed residual value of the equipment at the expiry of the lease is estimated to be 1,33,500. The assets would revert to the lessor at the end of the lease. Given that the implicit rate of interest is 10%. You are required to calculate the amount of the annual lease payment and the unearned finance income. Discounting Factor at 10% for years 1, 2 and 3 are 0.909, 0.826 and 0.751 respectivelyStep by Step Solution
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