Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / XYZ Ltd leased an item of machinery for a five year term on 1 October 2020

XYZ Ltd leased an item of machinery for a five year term on 1 October 2020

Accounting

  1. XYZ Ltd leased an item of machinery for a five year term on 1 October 2020. The present value of the lease liability is $25,975. The interest rate implicit in the lease is 4% and the annual lease payments equal $9,000. Lease payments are made in advance, commencing on 1 October 2020. What is the appropriate journal on 1 October 2020? Date Account Debit Credit 1 October 2020 Right of Use Asset 25,975 Lease Liability 16,975 Cash 9,000 Date Account Debit Credit 1 October 2020 Lease Liability 7,961 Interest Expense 1,039 Cash 9,000 Date Account Name Debit Credit 1 October 2020 Right of Use Asset 16,975 Lease Liability 16,975 None of the above

  2. On 1 July 2020, Connor Ltd purchased equipment for its fair value and then leased it to Violet Ltd. The lease agreement details are as follows. Length of lease 5 years Commencement date 1 July 2020 Annual lease payment, payable 1 July each year commencing 1 July 2020 $15 000 Residual value at the end of the lease term. $6,000 Interest rate implicit in the lease 4% The lease payments include $3,000 paid for insurance and maintenance costs. The residual value is unguaranteed. Required What is the present value of the lease liability on 1 July 2020? (round your answer to the nearest dollar if necessary) $55,559 $53,421 O $60,490 None of the above

Option 1

Low Cost Option
Download this past answer in few clicks

2.91 USD

PURCHASE SOLUTION

Already member?


Option 2

Custom new solution created by our subject matter experts

GET A QUOTE

Related Questions