Helpful pic is a finance company. It purchased computer equipment for R78 500 and leased it to Chatroom Ltd under a three year lease with three payments of R29 000 payable annually in advance. Chatroom Ltd agreed to also pay R830, which represented the cost of setting up the lease. What amount will be recognised in the Helpful pic balance sheet at the end of the first year? Select one: O a. R55 363 O b. R55 330 O c. R49 500 O d. R50 330
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- Helpful plc is a finance company. It purchased computer equipment for R78 500 and leased it to Chatroom Ltd under a three year lease with three payments of R29 000 payable annually in advance. Chatroom Ltd agreed to pay R830, which represented the cost of setting up the lease. At the end of the first year, the balance sheet reported a balance of R55 363. The implicit rate of interest is 10%. What amount will be recognised in the Helpful plc income statement as interest in the second year? Select one: a. R5 536 b. R2 636 c. R830 d. R29 000Evans Ltd leases their equipment from Mitchell Co. The typical arrangement that Evans have with Mitchell Co. is that the asset is typically leased for the length of its useful life. On 1 January 2021, a new machine was leased for which annual payments of £200,000 are made. The implicit interest rate is 10%. How would Evans treat this transaction in their financial statements of the current year? Provide calculations where you find relevant.Smart Ltd negotiated a lease for equipment on the following terms: the lease had a 3 year term; the purchase price of the new equipment was R41 250; there were to be 3 annual payments of R15 000 payable in advance; and Smart Ltd was able to borrow at 10% per annum. The finance charge in the first year using the sum of the digits method would be Select one: O a. R2 500 O b. R4 125 O c. R15 000 O d. R1 500
- On 1 January 2021 Linguine plc acquires a new machine under a leasing arrangement.The terms are:An Initial payment of £13,760, payable immediately on 1 January 2021 4 further annual payments of £20,000, starting 1 January 2022 The interest rate charged by the lessor is 8% The asset has a life of 5 years Calculate the following balances to present in Linguine's financial statements for theyear ended 31 December 2021(i) The carrying amount of the right of use asset(ii) Current lease liability(iii0 Non-current lease liabilityQ1. Please provide proper calculations and workings. Provide the answer in a format easily I can copy in Excel. Hardy plc prepares financial statements to 31 March each year. On 1 October 2019 it leased machinery from Hirer on the following terms:(i) a lease rental of £50,000 is payable half-yearly in arrears for five years.(ii) the rate of interest implicit in the lease is reliably computed at 4% per half-year(iii) on completion of the primary period Hardy has an option to lease the asset for a further two years at a rental of £25,000, payable half-yearly in arrears. At the start of the lease it was considered unlikely that Hardy would exercise this option.(iv) the estimated useful economic life of the machinery at the inception of the lease was twelve yearsRequired:1/ Compute the carrying value of the ‘right of use asset’ in the statement of financial position of Hardy at 31 March 2020 and 31 March 2021.2/ Compute the finance cost of Hardy for the years ended 31 March 2020 and 31…Cassandra Company decides to enter the leasing business. The entity acquires a specialized packaging machine for P3,000,000 cash and leases it for a period of 6 years after which the machine is to be returned to Cassandra Company for disposition. The guaranteed residual value of the machine is P200,000. The lease term is arranged so that a return of 12% is earned by Cassandra Company. 1. What is the annual rental payable in advance required to yield the desired return?
- Baltimore Ltd entered into a contract to acquire a vehicle from BryanstonMotors. The lease term as well as the economic life of the vehicle is fiveyears. The cash price of the vehicle is R180 000. The lease liability is payablein annual instalments of R45 082 from 1 May 2019. The interest rate implicit in the lease is 8%. Baltimore Ltd paid attorney fees of R800 in respect of the lease agreement. It is the accounting policy of Baltimore Ltd to depreciate vehicles over five years on a straight‐ line basis.Required:Q.1.2.1 In terms of IFRS16 – Leases briefly discuss why the above contractis a lease.Q.1.2.2 Complete the amortisation schedule for the lease of the vehicle.Round all amounts to the nearest rand.Q.1.2.3 Calculate the depreciation for the reporting period ending31 March 2020 in the books of the lessee. All answers must comply with the requirements of International FinancialReporting Standards (IFRS), in particular IFRS16 – Leases.All calculations must be shown as marks will be…On 1 January 2012, Main Contractors Ltd leased a new machine from the Solvitol Finance Company. The following details were obtained from the lease agreement. The capital cost of the machine at 1 January 2012 was £50,000. Six half-yearly payments of £11,000 each are payable in advance, commencing 1 January 2012 in the primary term. Three annual payments of £100 are payable in the secondary term. Main Contractors Ltd has not yet decided if it will take advantage of the secondary term. The estimated useful life of the machine is five years, with a nil residual value. The estimated residual value after three years is £10,000 and, of this, 95% is accountable to Main Contractors Ltd. It is the policy of Main Contractors Ltd to use the straight line method of providing for depreciation. Using (a) the sum of the digits method and (b) the actuarial method, calculate the effect of this rental on the annual accounts of Main Contractors Ltd to 31 December for the relevant…On 1 April 20X8 Hop entered a two-year lease agreement for a photocopier and on that date made a payment of £1,000. The second payment is due on 1 April 20X9 which is £2,000. This has been classified as a 'low value asset'. The £1,000 has been recorded as Dr Administration expenses, Cr Bank.
- The Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance.Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings wasR125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. What isthe present value of the operating lease?Select one:a.None of the given options is correctb.R125 000c.R64 571d.R48 188The Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance. Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings was R125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. The land would be classified as Select one: O a. a finance lease O b. an accounting lease O c. a financial lease O d. an operating leaseThe Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance.Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings wasR125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. The landwould be classified as_______.Select one:a.an accounting leaseb.a finance leasec.a financial leased.an operating lease