Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following facts are for a non-cancellable lease agreement between Blossom Corporation and Russell Corporation, a lessee: Inception date July 1, 2020 Annual lease payment

The following facts are for a non-cancellable lease agreement between Blossom Corporation and Russell Corporation, a lessee:
Inception date July 1, 2020
Annual lease payment due at the beginning of each year, starting July 1, 2020 $ 20,194.64
Bargain purchase option price at end of lease term reasonably certain to be exercised by Russell $ 3,700.00
Lease term 5 years
Economic life of leased equipment 10 years
Lessors cost $ 48,800.00
Fair value of asset at July 1, 2020 $ 89,600.00
Lessors implicit rate 8%
Lessees incremental borrowing rate 8%
The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. The lessee assumes responsibility for all executory costs. Both Russell and Blossom use IFRS 16.

(a)

Calculate the amount of the right-of-use asset and lease liability.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting concepts and applications

Authors: Albrecht Stice, Stice Swain

11th Edition

978-0538750196, 538745487, 538750197, 978-0538745482

More Books

Students also viewed these Accounting questions

Question

Why is a black hole invisible?

Answered: 1 week ago

Question

How is ????1 different from ????1?

Answered: 1 week ago

Question

Th eir solution was to give me a long-distance number to call.

Answered: 1 week ago