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Operating leases in the books of the Lessor Mambo Ltd hires out individuals plant on long term operating leases. On 1 st January 2001 it
Operating leases in the books of the Lessor Mambo Ltd hires out individuals plant on long term operating leases. On 1st January 2001 it entered into a seven year lease on a mobile crane. The terms of the lease are shs. 1,750,000 payable on 1st January 2001, followed by six rentals of shs.700, 000, paid on 1 Jan 2001 to 2007. The crane will be returned to Mambo Ltd on 31st Dec. 2007. The crane cost shs.880, 000 and has a 25 year useful with no residual value.
Required:
- Calculate the annual rental income that will be claimed by Mambo Ltd. (1 mark)
- Prepare extracts from the income statement for Mambo Lt from 2001 to 2005. (4 marks)
- Prepare the balance sheet extract for Mambo Ltd from 2001 to 2005. (10 marks)
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