Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. abc ltd acquired the use of mixer truck under a le

ABC Ltd acquired the use of mixer truck under a lease agreement which commences 1...

80.2K

Verified Solution

Question

Accounting

ABC Ltd acquired the use of mixer truck under a lease agreement which commences 1 October 2019. The lease contains the following key agreements:

Initial payment

An initial payment of $100,000 to be paid on 1 October 2019

Lease Payments

2 payments of $170,000 to be paid on 30 September 2020 and 30 September 2021

Transfer of ownership

Ownership of the mixer truck will transfer to ABC Ltd on 30 September 2021 after final payment.

Interest rate Implicit interest rate is 12%

Additional information:

- ABC estimates the trucks useful life is 8 years

- Incremental borrowing rate is 14%

- Legal costs incurred $10,000 in setting up the lease

TASK:

Please prepare the journal entries in relation to the lease in the books of ABC Ltd for the year beginning 1 October 2019 to ending 30 September 2020. Narrations are required and show all workings.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Name and discuss two main goals of finance. Are these goals mutually exclusive? Explain your answer.

Finance
Q

A symmetrical 2D plate is bounded by the curve ?=?2 and ? =2−?2. Find the first...

Basic Math
Q

A plant cell develops a mutation in its Rubisco gene that results in no production of...

Biology
Q

A 20 00 mL sample of 0 220 M triethylamine CH3CH2 3N is titrated with...

Biology
Q

An eight sided die which may or may not be a fair di has four...

Statistics
Q

Fill in each blank with the appropriate word or expression required to solve -3x =...

Algebra
Q

14 Write 54 in simplest form 3 271 0 22

Algebra
Q

em 4 The graph of f is given to the right Which of the below...

Algebra
Q

$0 Garrison Company, a job-order costing firm, applies overhead to jobs on the basis of...

Accounting
Q

Magnolia, Inc., manufactures bedding sets. The budgeted production is for 17,900 comforters this year. Each...

Accounting
Q

Sunland Corporation had net income of $2,060,000 and paid dividends to common stockholders of $297,000...

Accounting
Q

As a consultant to Basso Inc., you have been provided with the following data: D1...

Finance