Question
Pernia Ltd signed a 4-year contract with Comp Ltd for the use of a customised machinery on 1 July 2018. The implicit interest rate in
Pernia Ltd signed a4-year contractwith Comp Ltd for the use of a customised machinery on 1 July 2018. The implicit interest rate in the contract is 10%. The annual lease payments payable at the end of each year are $45,000,the first lease payment is on 30 June 2019. Pernia Ltd intends toreturn the assetat the end of the lease term. The leased machinery meets the criteria of a leased asset in accordance with AASB16Leases.
The following information shows the lease terms:
Lease commencement date
1 July 2018
Economic life of machinery
10 years
Present value of the4 annuallease payments, (not including Guaranteed Residual Value)
$142,645
Guaranteed Residual Value at the end of the lease term (undiscounted)
$80,000
Present value of the Guaranteed Residual Value at the end of the lease term
$54,640
Residual value (undiscounted) at end of its economic life
$100,000
Present value of the residual value at the end of its economic life
$38,550
What is the amount to be recorded as aNon-current Lease Liabilityin the books of Pernia Ltd that is in accordance with AASB16Leaseson30 June 2020?
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Managerial Accounting
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
4th edition
1259964957, 1260413985, 1260565440, 978-1260413984
