Part II (8 Marks) The following information relates to a lease contract for computer equipment: $5,000 $5,000 July 1, 2020 3 years 4 years Fair market value of equipment at lease inception Lessor's cost of equipment Lease inception Lease term (fixed and non-cancellable) Estimated economic life of equipment Interest rate implicit in the lease Annual lease payments (first payment due July 1, 2020) Guaranteed residual value by lessee Fiscal year end of lessor Collectability of lease payments Depreciation method of lessee 13.29% $1,620 $1,000 June 30 Assured Straight-line Required: a. For the lessor, which is subject to the requirements of IFRS 16, is this an operating or finance lease? Support your answer. (2 Marks) b. Assuming the lease is classified as a finance-type lease, prepare all the journal entries for the lessor from July 1, 2020 through July 1, 2021, using the either the net method or the gross method of recording (ignore depreciation). (6 Marks) MAN NJ tv 4 W 29 Part II (8 Marks) The following information relates to a lease contract for computer equipment: $5,000 $5,000 July 1, 2020 3 years 4 years Fair market value of equipment at lease inception Lessor's cost of equipment Lease inception Lease term (fixed and non-cancellable) Estimated economic life of equipment Interest rate implicit in the lease Annual lease payments (first payment due July 1, 2020) Guaranteed residual value by lessee Fiscal year end of lessor Collectability of lease payments Depreciation method of lessee 13.29% $1,620 $1,000 June 30 Assured Straight-line Required: a. For the lessor, which is subject to the requirements of IFRS 16, is this an operating or finance lease? Support your answer. (2 Marks) b. Assuming the lease is classified as a finance-type lease, prepare all the journal entries for the lessor from July 1, 2020 through July 1, 2021, using the either the net method or the gross method of recording (ignore depreciation). (6 Marks) MAN NJ tv 4 W 29
