Homework SourseI NEED HELP AS SOON AS POSSIBLE THANK YOUSolution1The nature
I NEED HELP AS SOON AS POSSIBLE. THANK YOU.
Solution
1)The nature of lease is finance lease .As the lease period covers the major portion of economic life of asset .
2)Present value of lease payment : 13753+803=14556
3)
***Lease carrying value at beginning of second month = 14556-310 = 14246
***depreciation =[cost-salvage]/useful life
=[14556-1030]/50
= 270.52 per month
5)present value of lease payment : 14556 as the lessee has guaranteed the minimum residual value thus it becomes his financial obligation.there will be no change in present value.
| Date | Account | Debit | credit |
| 1 | Leased equipment | 14556 | |
| Lease liability | 14556 | ||
| [Being equipment taken on lease] | |||
| 2 | Lease liability | 310 | |
| cash | 310 | ||
| [Being first month lease payment made] | |||
| 3 | Lease liability [ | 239 | |
| Interest expense [14246*.5%] | 71 | ||
| cash | 310 | ||
| 4 | Depreciation expense | 270.52 | |
| Accumulated depreciation | 270.52 | ||
| [First month amortisation recorded] | |||
