On January 1, 2021, Blossom Ltd., which uses IFRS 16, entered into an eight-year lease agreement for a conveyor machine. Annual lease payments are $26,300 at the beginning of each lease year, which ends December 31, and Blossom made the first payment on January 1, 2021. At the end of the lease, the machine will revert to the lessor. However, conveyor machines are expected to last for only eight years and have no residual value. At the time of the lease agreement, conveyor machines could be purchased for $151,000 cash. Equivalent financing for the machine could have been obtained from Blossom's bank at 11%. Blossom's fiscal year coincides with the calendar year. Blossom uses straight-line depreciation for its conveyor machines. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Calculate the PV of the minimum lease payments using (1) a financial calculator or (2) Excel functions. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 1,452.) Present value of the minimum lease payments $ Prepare an amortization schedule for the term of the lease to be used by Blossom Ltd. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round answers to O decimal places, e.g. 1,452.) Blossom Ltd. Lease Amortization Schedule (Lessee) Interest on Unpaid Liability Annual Lease Payments Reduction of Lease Liability Balance of Lease Liability $ ta $ $ Prepare the journal entries OH DIUSSUHT LLU.S VUUKS LU Trenect the signing of the lease agreement, Tecor the payments and expenses related to this lease for the years 2021 and 2022, and (3) make any adjusting journal entries at its fiscal year ends of December 31, 2021 and 2022. Blossom does not use reversing 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 for the amounts. Round answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit (To record inception and payment of lease.) (To record depreciation expense.) (To record interest.) (To record lease payment.) (To record depreciation expense.)
