Show ONLY the following three-line items in the Statement of Financial Position as at 30 June 2021: Right of use asset Current portion of lease liability Lease liability
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Darwin Limited entered into a lease agreement on 1 July 2020 for its demolition machinery. The duration of the lease is four years. The cost price of the machinery was R1 800 000. Installments of R432 649 are payable annually in arrears on 30 June. The implicit interest rate is 15% per annum. Ownership will be transferred to Darwin Limited at the end of the lease term.
Darwin Limited
REQUIRED:
Show ONLY the following three-line items in the
- Right of use asset
- Current portion of lease liability
- Lease liability
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- On 1 March 2020,the company entered into a lease agreement in order to lease a manufacturing machine with a costprice of R250 000 (VAT inclusive). The period of the lease is five years, and the useful life of the machinery is estimatedat six years. The following is an extract from the lease agreement:4.1.1 Ownership of the machinery will be transferred to the Lessee at the end of the lease.4.1.2 Should the Lessee cancel the lease, the Lessor’s losses will be borne by the Lessee.Monthly instalments are payable in arrears and amount to R5 947 (VAT inclusive). The company used themanufacturing machine for a qualifying purpose. The company is a registered VAT vendor.Required:Provide the deferred tax movement per the balance sheet method for the lease agreement for the financial year ending31 December 2021. Clearly indicate whether the movement represents an income or an expense. Note:- Show all calculations, marks are awarded for calculations.- You may round off to the nearest Rand.PRIMAX BHD signed a five-year contract to lease a machinery to LM BHD on 1 January 2020. The contract requires LM BHD. to make an annual payment of RM18,000 on the signing date and subsequently on 31 December every year. LM BHD has guaranteed RM8,000 on the residual value. The machinery was purchased by PRIMAX at RM100,000 on 1 January 2019 with an estimated residual value of RM10,000 and useful life of seven years. PRESENT VALUE TABLE i. Assuming the implicit rate is 8 percent, show the journal entry on 1 January 2020 for PRIMAX BHD. ii. Show all the journal entries on 31 December 2020 related to the lease for PRIMAX BHD.LTK BHD entered into an agreement to lease a forklift from HEAVY MACHINERY BHD on 1 January 2020. The lease is for six-year which requires LTK to make annual payments of RM25,000, payable in advance on 1 January 2020 and subsequently on 31 December each year. At the end of the lease, the forklift will be returned to HEAVY MACHINERY BHD. The cost of machine is RM200,000 with the expected residual value of RM20,000 and useful life of 10 years. PRESENT VALUE TABLE i. Assuming the implicit rate is 8 percent, show the journal entry on 1 January 2020 for LTK BHD. ii. Show all the journal entries on 31 December 2020 related to the lease for LTK BHD.
- On 1 January 2019, Time Limited entered into a four-year contract to lease a machine. The annual lease payments are £20,000, payable in arrears on 31 December each year. The interest rate implicit in the lease is 10%. There were no initial direct costs. The first lease instalment was paid on 31 December 2019. Time Limited calculates depreciation on a straight-line basis and the machine is expected to have no residual value at the end of the lease term. Requirement Based upon the information provided above, prepare extracts for the financial statements of Time Limited for the year ended 31 December 2019 in accordance with IFRS 16 Leases. Q1 What is the value of the lease liability at the inception of the lease on 1 January 2019 in accordance with IFRS 16 Leases? Group of answer choices £20,000 £63,380 49,380 £80,000 Q2 What is value of the current lease liability on 31 December 2019 in accordance with IFRS 16 Leases? Group of answer choices £34,690 £18,180 £49,718 £15,028 Q3 What is the…On 1 July 2020, Andrew Ltd enters into a 5-year agreement to lease an item of machinery from Josh Ltd. Andrew Ltd incurred costs of $4 500 in setting up the lease agreement. The machinery has a fair value of $450 000 at the inception of the lease and it is expected to have an economic life of 6 years, after which time it will have a residual value of $35 000. The lease agreement details are as follows: Length of lease 5years Commencement date 1 July 2020 Annual lease payment, payable 30 June each year commencing 30 June 2021 $95,000 Residual value at the end of the lease term $80,000 Residual value guarantee by Andrew Ltd $50,000 Interest rate implicit in the lease 10% The lease is cancellable without any penalties All insurance and maintenance costs are paid by Josh Ltd and are expected to amount to $15 000 per year and will be reimbursed by Andrew Ltd by being included in the annual lease payment of $95 000. The machinery will be…Carsons Ltd entered into the following lease agreement on the 1 January 2020: To produce a new foiled Christmas product, a new printing and folding machine was leased and received on 1 January 2020. The plant is held within the main warehouse operated by the company and required a complex installation that was completed and settled on 1 January 2020 at a cost of £35,000. The new plant is to be leased for 7 years at an annual rental payment of £350,000, payable on 31 December of each year. To delay receipt of the plant until 1 January 2020, the lessor paid a £20,000 incentive to Carsons Ltd which was received on 1 January 2020. The implicit rate of the lease is 8%. Help show how the information can be accounted for and adjusted into the finacial statements according to IFRS
- On 1 November 2014 Oshimbala Foods Ltd purchased equipment with an invoice price of N$ 273 600 under a lease agreement. The lease payments will consist of equal annual instilments over a period of 4 years, payable in arrears. The interest rate applicable on this lease agreement is 8% per year. All payments due have been paid on time each year. The equipment is depreciated on the straight line basis over 5 years with no residual value.Required:Disclose the long term borrowings note applicable to the lease liability in the Statement of Financial Position of Oshimbala Foods Ltd on 31 October 2016 in accordance with International Financial Reporting StandardsNote: Round disclosed amounts to the nearest Dollar.On January 1, 2020, Bacarra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000. Assume it is a sales-type lease with an implicit rate of 10%, how much is the net lease receivable as of yearend 2020? Assume it is a sales-type lease with an implicit rate of 10% and the residual value is unguaranteed, how much should be credited to sales resulting from the lease? Assume it is a sales-type lease with an implicit rate of 10% and the residual value is unguaranteed, how much is cost of sales resulting from the lease? Assume it is a sales-type lease with an implicit rate of 10% and the residual value is unguaranteed, how much is the net income from the lease to be reported in 2020? Assume the residual value is unguaranteed and the fair…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 January 1, 2020, Bacarra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000. Assume it is a sales-type lease with an implicit rate of 10% and the residual value is unguaranteed, how much is cost of sales resulting from the lease?JK Ltd leased equipment to Co. EF for 8 years, at which time the asset will revert to JK Ltd. The equipment cost JK Ltd $16m and has an expected useful life of 12 years. Its selling price is $22.4m. The present value of the lease payments is $20.4m. The first payment was made at the commencement of the lease. Required: How should JK Ltd classify this list and why?On January 1, 2020, Bacarra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000. Assume it is a sales-type lease with an implicit rate of 10% and the residual value is guaranteed, how much is the net income from the lease to be reported in 2020?
