QUESTION 1 (10 marks) On 1 July 2019, Kasse Ltd entered into a 6-year contract to lease a crane for its construction business. When negotiating the lease contract, on 1 July 2019, Kasse Ltd paid direct costs of S14,000 to obtain an engineering safety certificate for the crane from the Victorian Construction Panel. The lease contract requires Kasse Ltd to make 6 annual lease payments of $70,000, with the first payment due on 30 June 2020. The lease contract includes a guaranteed residual of $120,000, which is payable by Kasse Ltd at the end of the lease term. The crane is expected provide equal benefits each year of its expected useful life of 10 years, after which it will have a salvage value of $20,000. The implicit interest rate in the lease contract is 9% per annum. The relevant present values are: Interest Rate Present Value of $1 in 6 Present Value of an years annuity of $1 for 6 years 9% 0.59627 4.48592 REQUIRED: a) Prepare a schedule of lease payments for Kasse Ltd for the financial years ending 30 June 2020 and 30 June 2021, showing lease payments, interest expense, principal reduction, and outstanding lease liability. Show all workings necessary to derive your answer. (5 marks) ANSWER: 12 RIVILT ssification Trusted b) Provide the journal entries for Kasse Ltd relating to the lease contract for the financial year ending 30 June 2020, in accordance with AASB16 Leases. (5 marks) ANSWER: QUESTION 1 (10 marks) On 1 July 2019, Kasse Ltd entered into a 6-year contract to lease a crane for its construction business. When negotiating the lease contract, on 1 July 2019, Kasse Ltd paid direct costs of S14,000 to obtain an engineering safety certificate for the crane from the Victorian Construction Panel. The lease contract requires Kasse Ltd to make 6 annual lease payments of $70,000, with the first payment due on 30 June 2020. The lease contract includes a guaranteed residual of $120,000, which is payable by Kasse Ltd at the end of the lease term. The crane is expected provide equal benefits each year of its expected useful life of 10 years, after which it will have a salvage value of $20,000. The implicit interest rate in the lease contract is 9% per annum. The relevant present values are: Interest Rate Present Value of $1 in 6 Present Value of an years annuity of $1 for 6 years 9% 0.59627 4.48592 REQUIRED: a) Prepare a schedule of lease payments for Kasse Ltd for the financial years ending 30 June 2020 and 30 June 2021, showing lease payments, interest expense, principal reduction, and outstanding lease liability. Show all workings necessary to derive your answer. (5 marks) ANSWER: 12 RIVILT ssification Trusted b) Provide the journal entries for Kasse Ltd relating to the lease contract for the financial year ending 30 June 2020, in accordance with AASB16 Leases