Sheridan Mining Corporation, a public company whose stock trades on the Toronto Stock Exchange, uses IFRS. The vice-president of finance has asked you, the assistant controller, to prepare the companys current accounting of a lease. The lease was signed by Sheridan on April 1, 2020, with Bertrand Ltd. for a piece of excavation equipment. The following information relates to the agreement. 1. The term of the non-cancellable lease is 3 years, with a renewal option of one additional year at the annual rate of 130% of the initial payment. The equipment has an estimated economic life of 10 years. 2. The assets fair value at April 1, 2020 is approximately $1.00 million. 3. The asset will revert to Bertrand at the end of the initial term of the lease, or at the end of the renewal period should Sheridan exercise that option. The excavation equipment is expected to have a fair value of $640,000 on March 31, 2022 and $540,000 on March 31, 2023, which is not guaranteed. 4.

Sheridan assumes direct responsibility for all executory costs for the excavation equipment. 5. The initial term of the lease agreement requires equal annual rental payments of $130,000 to Bertrand, beginning on April 1, 2020. 6. The lessees incremental borrowing rate is 12%. Bertrands implicit rate is 11% and is known to Sheridan. 7. Sheridan has a calendar year end. You found out that it has always been Sheridans intention to exercise the renewal period because of the nature of the asset. Sheridans operations manager says that there is a 75% chance that the renewal period will be exercised.

Determine the amount of the liability for lease payments at the signing of the lease. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.) Lease payments liability $ e Textbook and Media Assistance Used List of Accounts Use a computer spreadsheet to prepare an amortization schedule for Sheridan for the lease term including the expected lease renewal. (Round answers to 0 decimal places, e.g. 5,275.) Sheridan Mining Corporation Lease Amortization Schedule Annual Lease Payments Interest on Unpaid Liability Reduction of Lease Liability Balance of Lease Liability $ $ $ $ $ $ e Textbook and Media List of Accounts Prepare all of Sheridan's journal entries for fiscal years 2020 and 2021 to record the lease agreement and the lease payments. (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 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credi Apr. 1, 2020 Right-of-Use Asset Lease Liability Cash (To record inception of lease and first payment.) Dec. 31, 2020 V Interest Expense Lease Liability (To record interest.) Dec 31, 2020 Depreciation Expense Accumulated Depreciation - Right-of-Use Asset (To record depreciation expense.) Apr. 1, 2021 Right-of-Use Asset Lease Liability Cash (To record lease payment.) Dec 31, 2021 Interest Expense Lease Liability (To record interest.) Dec 31, 2021 Depreciation Expense Accumulated Depreciation - Right-of-Use Asset (To record depreciation expense.) Provide Sheridan's SFP disclosure for all of the amounts that would appear concerning the lease at December 31, 2021. (Round answers to 0 decimal places, e.g. 5,275.) Sheridan Mining Corporation Statement of Financial Position - Partial For the Month Ended December 31, 2021 Current Liabilities $ Liabilities $ e Textbook and Media List of Accounts Provide Sheridan's statement of income disclosure for the fiscal year ended December 31, 2021. (Round answers to 0 decimal places, e.g. 5,275.) Sheridan Mining Corporation Income Statement Right-to-Use Asset $ $ e Textbook and Media List of Accounts