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Walla Corporation, which uses ASPE, enters into a six-year lease of equipment on September 1, 2023, that requires annual payments beginning September 1, 2023. In
| Walla Corporation, which uses ASPE, enters into a six-year lease of equipment on September 1, 2023, that requires annual payments beginning September 1, 2023. In addition, Walla guarantees the lessor a residual value at lease end. | |||||||||||
| Amount of annual lease payments | $ 28,000 | ||||||||||
| Guaranteed residual value | 17,000 | ||||||||||
| Lease term in years | 6 | ||||||||||
| Useful life of equipment in years | 7 | ||||||||||
| Interest rate | 9% | ||||||||||
| a. | Using Excel function, calculate the amount of the capital lease and prepare Wallas September 1, 2023 journal entry. | ||||||||||
| Present value of lease payments | |||||||||||
| Debit | Credit | ||||||||||
| Equipment Under Lease | |||||||||||
| Obligations Under Lease | |||||||||||
| Cash | |||||||||||
| b. | Assume instead that Walls follows IFRS and that the amount expected to be paid under the residual value guarantee is changed as shown here. | ||||||||||
| New guaranteed residual value | $ 10,000 | ||||||||||
| Calculate the amount of the right-of-use asset and prepare Wallas September 2023 journal entries. | |||||||||||
| Present value of lease payments | |||||||||||
| Debit | Credit | ||||||||||
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Accounting Business Reporting For Decision Making
Authors: Jacqueline Birt, Keryn Chalmers, Suzanne Maloney, Albie Brooks, Judy Oliver, David Bond
7th Edition
0730369323, 9780730369325
