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On July 1, 2023, Ivanhoe Corp., which uses IFRS, signs a 4-year, non-cancellable lease agreement to lease a equipment from Cullumber Ltd. The following information
On July 1, 2023, Ivanhoe Corp., which uses IFRS, signs a 4-year, non-cancellable lease agreement to lease a equipment from Cullumber Ltd. The following information concerns the lease agreement. 1. The equipment's fair value on July 1,2023 is $286,000. 2. The agreement requires equal rental payments of $61,700.00 beginning on July 1,2023. 3. The equipment has an estimated economic life of 5 years, with an unguaranteed residual value of $83,200. Ivanhoe Corp. depreciates similar equipment using the straighivine method, with no residual value. 4. The lease is non-renewable. At the termination of the lease, the equipment reverts to Cullumber. 5. Ivanhoe's incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Ivanhoe Corp. 6. The yearly rental payment includes $4,798.47 of executory costs related to insurance on the equipment. Using (1) factor tables, (2) a financial calculator, or (3) Excel functions, calculate the amount Ivanhoe Corp will record for the rightof-use asset and lease liability. (Round foctor volues to 5 decimal ploces, eg. 1.25124 and final answers to 2 decimal ploces, e.g. 5,275.76. The amount of the right-of-use asset Date Account Titles and Explanation July 1 . 2023 Right-of-Use Asset Prepaid insurance 4798.47 Lease Liability Cash Prepare the journal entries on Ivanhoe Corp's books to record the payments and expenses related to this lease for the years 2023 and 2024 as well as any adjusting journal entries at its fiscal year ends of December 31,2023 and 2024. Ivanhoe does not use reversing entries. (List all debit entries before credit 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 0 for the amounts. Round answers to 2 decimal places, eg. 5,125.76. Record journal entries in the order presented in the problem.) (To record insurance expense) Dec31,2023 (To record depreciation) Dec. 31. 2023 (To record interest) (To record insurance expense) (To record depreciation) (To record interest) (To record interest)
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