Company X with a 31st December year-end entered into a three-year lease for a piece...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Company X with a 31st December year-end entered into a three-year lease for a piece of equipment on 1st January 2020. Company X paid a deposit of 30,000 on 1st January 2020 to the lessor. There are 3 further lease payments of 30,000 due on 31st December 2020, 31st December 2021,31st December 2022 which give a present value of 77,313 when discounted at 8%. Company X also paid initial direct costs of 687. Company X uses the straight line method for all its assets. The implicit interest rate in the lease is 8%. Compute the following for the year ending 31st December 2020 : (a) the total amount shown in company X's income statement in relation to the lease. (4 marks) (b) the current liability on company X's Statement of Financial Position. (2 marks)
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!
