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Show me the full calculations of lease payment schedule for both lessee and lessor. On 1 July 2019, Hate Ltd leased a processing plant to
Show me the full calculations of lease payment schedule for both lessee and lessor.
On 1 July 2019, Hate Ltd leased a processing plant to Love Ltd. The plant was purchased by Hate Ltd on 1 July 2019 for its fair value of $494,667. The lease agreement contained the following provisions: 3 years Lease term Economic life of plant 5 years Annual rental payment, in advance (commencing 1/7/2019) $150 000 Residual value at end of the lease term $90 000 Residual guaranteed by lessee $60 000 Interest rate implicit in lease 7% The lease is cancellable only with the permission of the lessor. Love Ltd intends to return the processing plant to the lessor at the end of the lease term. The lease has been classified as a finance lease by both the lessee and the lessor. Required Prepare the lease payment schedule for the lessee and lessor. (show all workings) [10 Marks]Step by Step Solution
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