QUESTION = 125 minutes 20 marks (a) (marks) Apply the classification criteria under ASPE to determine whether the equipment lease should be treated as an operating or capital lease by the lessee For the lessee, the machinery should be treated as ain) fuse the drop down menu to select your answer Shaw clearly how you determined the classification On May 1, 2020, Onio Corp which uses APE 10w, cancelease agreement to a specially from the Corp has a December 31 year end The long to the Internet 1. The agreement requires equal payments of 585, began ay 2020 2. The yearly payment includes $2,654 of sector come on the other 3. The whe's tas value on May 1, 2020 3640.000 4. The the lus an strated economie of 12 years with an unwanted residual value of $15.000 Oriol Corp. deprecates marque the straight line method 8. The teases non renewable At the motion of the least the reverts to the lesson 6.Ole's incremental borowing rate is 115 pory Theme rater is not known by Oriol Corp Lease term (oper Payment interest rate rate) 525 unica view Enable Editing B 21 D 30 23 24 Lease term (nper) 25 Payment (pm) 26 Interest rate (rate) 27 Future value (fv) 28 Type 29 Present value (pv) USE EXCEL FORMULAS TO CALCULATE THE PV. 31 Part (b): (3 marks) Prepare a lease amortization schedule for the lessee's lease obligation 32 for the term of the lease. Reduction of Balance of Lease 33 Dale Payment Interest Principal Liability 34 35 36 37 38 39 40 41 42 43 44 45 46 47 D 5 3 Part (c): (8 marks) Prepare the journal entries on the lessee's books for 2020. The company's year end is December 31. 1 Date Account title Debit 2 Credit 3 + 5 5 7 8 9 0 1 2 3 4 5 6 -7 8 -9 0 2 3 4 5 5 7 8 9 0 1 Part (d) (5 marks) Show how the lease would be reported on the company's year end statement of financial position Be specific as to classifications and amounts. 3 Statement of Financial Position (partial) December 31, 2020 5 6 7 8 9 0 1 2 3 4 -5 -6 QUESTION = 125 minutes 20 marks (a) (marks) Apply the classification criteria under ASPE to determine whether the equipment lease should be treated as an operating or capital lease by the lessee For the lessee, the machinery should be treated as ain) fuse the drop down menu to select your answer Shaw clearly how you determined the classification On May 1, 2020, Onio Corp which uses APE 10w, cancelease agreement to a specially from the Corp has a December 31 year end The long to the Internet 1. The agreement requires equal payments of 585, began ay 2020 2. The yearly payment includes $2,654 of sector come on the other 3. The whe's tas value on May 1, 2020 3640.000 4. The the lus an strated economie of 12 years with an unwanted residual value of $15.000 Oriol Corp. deprecates marque the straight line method 8. The teases non renewable At the motion of the least the reverts to the lesson 6.Ole's incremental borowing rate is 115 pory Theme rater is not known by Oriol Corp Lease term (oper Payment interest rate rate) 525 unica view Enable Editing B 21 D 30 23 24 Lease term (nper) 25 Payment (pm) 26 Interest rate (rate) 27 Future value (fv) 28 Type 29 Present value (pv) USE EXCEL FORMULAS TO CALCULATE THE PV. 31 Part (b): (3 marks) Prepare a lease amortization schedule for the lessee's lease obligation 32 for the term of the lease. Reduction of Balance of Lease 33 Dale Payment Interest Principal Liability 34 35 36 37 38 39 40 41 42 43 44 45 46 47 D 5 3 Part (c): (8 marks) Prepare the journal entries on the lessee's books for 2020. The company's year end is December 31. 1 Date Account title Debit 2 Credit 3 + 5 5 7 8 9 0 1 2 3 4 5 6 -7 8 -9 0 2 3 4 5 5 7 8 9 0 1 Part (d) (5 marks) Show how the lease would be reported on the company's year end statement of financial position Be specific as to classifications and amounts. 3 Statement of Financial Position (partial) December 31, 2020 5 6 7 8 9 0 1 2 3 4 -5 -6
