Sandhill Leasing Corporation, which uses IFRS, signs a lease agreement on January 1,2023 , to lease electronic equipment to Wai Corporation, which also uses IFRS. The term of the non-cancellable lease is two years and payments are required at the end of each year. The following information relates to this agreement. 1. Wai has the option to purchase the equipment for $11,400 on the termination of the lease, and this option is reasonably certain to be exercised. 2. The equipment has a cost and fair value of $185,000 to Sandhill Leasing. The useful economic life is two years, with a residual value of $11,400. 3. Wai is required to pay $5,500 each year to the lessor for insurance costs. 4. Sandhill Leasing wants to earn a return of 9% on its investment. 5. Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs that have not yet been incurred by the lessor. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Using (1) time value of money tables, (2) a financial calculator, or (3) Excel functions, calculate the lease payment that Sandhill Leasing would require from Wai. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 52.75.) Prepare the journal entries on Sandhill Leasing's books to reflect the payments received under the lease and to recognize income for the years 2023 and 2024. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 52,754.) Assuming that Wai exercises its option to purchase the equipment on December 31,2024 , prepare the journal entry to reflect the sale on Sandhill Leasing's books. (List debit entry before credit entry. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 52,754.) What amount would Wai capitalize and recognize as a lease liability and corresponding right-of-use asset on signing the lease? (Round answer to 0 decimal places, e.g. 52,257.) Sandhill Leasing Corporation, which uses IFRS, signs a lease agreement on January 1,2023 , to lease electronic equipment to Wai Corporation, which also uses IFRS. The term of the non-cancellable lease is two years and payments are required at the end of each year. The following information relates to this agreement. 1. Wai has the option to purchase the equipment for $11,400 on the termination of the lease, and this option is reasonably certain to be exercised. 2. The equipment has a cost and fair value of $185,000 to Sandhill Leasing. The useful economic life is two years, with a residual value of $11,400. 3. Wai is required to pay $5,500 each year to the lessor for insurance costs. 4. Sandhill Leasing wants to earn a return of 9% on its investment. 5. Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs that have not yet been incurred by the lessor. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Using (1) time value of money tables, (2) a financial calculator, or (3) Excel functions, calculate the lease payment that Sandhill Leasing would require from Wai. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 52.75.) Prepare the journal entries on Sandhill Leasing's books to reflect the payments received under the lease and to recognize income for the years 2023 and 2024. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 52,754.) Assuming that Wai exercises its option to purchase the equipment on December 31,2024 , prepare the journal entry to reflect the sale on Sandhill Leasing's books. (List debit entry before credit entry. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 52,754.) What amount would Wai capitalize and recognize as a lease liability and corresponding right-of-use asset on signing the lease? (Round answer to 0 decimal places, e.g. 52,257.)
