Oriole Mining Corporation, a public company whose stock trades on the Toronto Stock Exchange, uses IFRS. The vice-president of finance has asked you, the assistant controller, to prepare the companys current accounting of a lease. The lease was signed by Oriole on April 1, 2020, with Bertrand Ltd. for a piece of excavation equipment. The following information relates to the agreement.

1.		The term of the non-cancellable lease is 3 years, with a renewal option of one additional year at the annual rate of 135% of the initial payment. The equipment has an estimated economic life of 10 years.
2.		The assets fair value at April 1, 2020 is approximately $1.20 million.
3.		The asset will revert to Bertrand at the end of the initial term of the lease, or at the end of the renewal period should Oriole exercise that option. The excavation equipment is expected to have a fair value of $645,000 on March 31, 2022 and $545,000 on March 31, 2023, which is not guaranteed.
4.		Oriole assumes direct responsibility for all executory costs for the excavation equipment.
5.		The initial term of the lease agreement requires equal annual rental payments of $128,000 to Bertrand, beginning on April 1, 2020.
6.		The lessees incremental borrowing rate is 12%. Bertrands implicit rate is 11% and is known to Oriole.
7.		Oriole has a calendar year end.

You found out that it has always been Orioles intention to exercise the renewal period because of the nature of the asset. Orioles operations manager says that there is a 90% chance that the renewal period will be exercised. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

(a)

	Your answer is incorrect. Try again.

Determine the amount of the liability for lease payments at the signing of the lease. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.)

Lease payments liability

$

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Attempts: 5 of 5 used

(b)

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Use a computer spreadsheet to prepare an amortization schedule for Oriole for the lease term including the expected lease renewal. (Round answers to 0 decimal places, e.g. 5,275.)

Oriole Mining Corporation Lease Amortization Schedule
Date		Annual Lease Payments		Interest on Unpaid Liability		Reduction of Lease Liability		Balance of Lease Liability
								$
Apr. 1 2020		$				$
Apr. 1 2021
Apr. 1 2022
Apr. 1 2023
		$		$		$