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pur On 1 April 2019, Luke Ltd (Luke) leases an equipment with an estimated useful life of 6 years under the following agreement from Rey
pur On 1 April 2019, Luke Ltd (Luke) leases an equipment with an estimated useful life of 6 years under the following agreement from Rey Ltd (Rey): It is a non-cancellable agreement. An initial payment of $5,216 will be payable by Luke straight away. Four further annual payments of $22,500 by Luke will be due, beginning on 31 March 2020. Luke can purchase the equipment on 31 March 2023 at $10,000. At the inception date, it is expected that Luke will not purchase the equipment at the end of the lease. The incremental borrowing rate used by the lessee is 596. PVF-OA4 596 = 3.54595 PVF4,596 = 0.82270 PVF-OA2.896 = 1.78326 PVF2.896 = 0.85734 Required: What is the balance of the right-of-use asset recorded in Luke's financial statements at 31 March 2021 if at that date, it is expected that Luke will purchase the equipment at the end of the lease and the revised incremental borrowing rate is 896? A $49.359 B. $27,891 c. 542,500 D. 548,696
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