Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

n 1 July 2015, Flyer Ltd decides to lease an aeroplane from Finance Ltd. The term of the lease is 20 years. The implicit interest

n 1 July 2015, Flyer Ltd decides to lease an aeroplane from Finance Ltd. The term of the lease is 20 years. The implicit interest rate in the lease is 10 percent. It is expected that the aeroplane will be scrapped at the end of the lease term. The fair value of the aeroplane at the commencement of the lease is $ 2,428,400. The lease is non cancellable, returns the aeroplane to Finance Ltd at the end of the lease, and requires a lease payment of $300,000 on inception of the lease ( on 1 July 2015) and lease payments of $250,000 on 30 June each year (starting 30 June 2016). There is no residual payment required.

(a) Provide entries for the lease in the books of Flyer Ltd as at 1 July 2015

(b) Provide the entries for the lease in the books of Finance Ltd as at 1 July 2015

(c) Provide the journal entries sin the books of Flyer Ltd for the final year of the lease ( that is, the entry in 20 years time).

(d) Provide the journal entries in the books of Finance Ltd for the final year of the lease (that is, the entry in 20 years time).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting What the Numbers Mean

Authors: David Marshall, Wayne McManus, Daniel Viele

12th edition

007802529X, 1259969525, 978-1260565492

More Books

Students also viewed these Accounting questions

Question

Find the median for the set of measurements 2, 9, 11, 5, 6.

Answered: 1 week ago