Pharoah Ltd a public company following IFRS, recently signed a lease for equipment from Costner Ltd The lease term is years and
requires equal rental payments of $ at the beginning of each year. The equipment has a fair value at the lease's inception of
$ an estimated useful life of years, and no residual value. Pharoah pays all executory costs directly to third parties. The
appropriate interest rate is
Click here to view the factor table PRESENT VALUE OF
Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
Using tables, a financial calculator, or Excel functions, calculate the amount of the rightofuse asset and lease liability. Prepare the
initial entry to reflect the signing of the lease agreement and the first payment under the lease. List all debit entries before credit entries.
Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select No Entry"
for the account titles and enter for the amounts. Round factor values to decimal places, eg and final answers to decimal places,
eg
Account Titles and Explanation
Debit
Credit
