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  • Ia T21 Ans

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    This document contains information about two lease agreements. The first is for Burke as the lessee, with annual rental payments of $8,668 over 5 years. The second is for Stora Enso as the lessee, with annual rental payments of $71,830 over 10 years plus a $3,000 residual value payment. For both leases, the right of use asset and lease liability accounts are recorded at inception. Interest and depreciation expenses are recorded each year to reduce the lease liability and right of use asset balances. The Stora Enso lease meets the criteria to be classified as a finance lease.

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    IA T21 ANS

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    This document contains information about two lease agreements. The first is for Burke as the lessee, with annual rental payments of $8,668 over 5 years. The second is for Stora Enso as the lessee, with annual rental payments of $71,830 over 10 years plus a $3,000 residual value payment. For both leases, the right of use asset and lease liability accounts are recorded at inception. Interest and depreciation expenses are recorded each year to reduce the lease liability and right of use asset balances. The Stora Enso lease meets the criteria to be classified as a finance lease.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    Download as xlsx, pdf, or txt
    4 views2 pages

    Ia T21 Ans

    Uploaded by

    ckwai0603
    This document contains information about two lease agreements. The first is for Burke as the lessee, with annual rental payments of $8,668 over 5 years. The second is for Stora Enso as the lessee, with annual rental payments of $71,830 over 10 years plus a $3,000 residual value payment. For both leases, the right of use asset and lease liability accounts are recorded at inception. Interest and depreciation expenses are recorded each year to reduce the lease liability and right of use asset balances. The Stora Enso lease meets the criteria to be classified as a finance lease.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 2

    E21.

    2
    lease payable for Burke (lessee)
    (a) rental payment (starting from dec31) 8668
    PV annuity due (i=5%;n=5) 4.54595
    PV of rental payments 39404.29

    (b) 12/31/2021
    right of use assets 39404.29
    lease liabilities 39404.29

    lease liabilities(100%P ) 8668


    cash 8668

    12/31/2022
    lease liability 7131.19
    interest expense 1536.81
    cash 8668

    depreciation expense 7880.86


    right of use assets 7880.86

    E21.4 lease payable for stora enso (lessee)


    rental payment (starting from 31 dec) 71830
    PV annuity due (i=8%; n=10) 7.24689
    PV of annual rental payment 520544.11

    additional lease payment (guaranteed residual value > expexted residual value)
    guaranteed residual value 10000
    expected residual value 7000
    additional lease payment 3000
    PV $1(i=8%; n=10) 0.46319
    PV of single amount of residual value 1389.57

    lease liabilities
    PV of annual rental payment 520544.11
    PV of single amount of residual value 1389.57
    521933.68

    (a) 12/31/2021
    right of use assets 521933.68
    lease liabilities 521933.68

    lease liabilities 71830


    cash 71830
    12/31/2022
    interest expense 36008.29
    lease liabilities 35821.71
    cash 71830

    depreciation expense 52193.37


    right of use assets 52193.37

    12/31/2023
    interest expense 33142.56
    lease liabilities 38687.44
    cash 71830

    depreciation expense 52193.37


    right of use assets 52193.37

    (d) lease liabilities 3000


    gain on lease 3000

    E21.13 Y/N
    transfer of ownership N lease term test = 5
    purchases option test N 6
    lease term test (75%) Y 0.83333333
    PV test (90%) N
    alternative use test N
    lease: non-cancellable Y PV test =
    >> finance lease

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