Assume the financial year ends on December 31 Prepare the lease schedule for the lessee Show working and the balance should be 0.00 or close to 0.00
On January 1, 2013, Boss Limited signed off on a leasing contract with MR Stationery
to lease a specialized, state-of-the-art photocopier. The following information relates
to the lease contract.
1. The cost of the photocopier is $525,000 and the fair value of the equipment on
January 1 2013 is $700,000.
2. The term of the lease is 7 years with no option to renew and the photocopier has
an estimated useful life of 9 years
3. At the end of the lease term, the photocopier must be returned to the Boss
Limited. It has a guaranteed residual value of $50,000. MR Stationery uses the
straight line method of depreciation (when applicable)
4. The lease agreement requires annual rental payments beginning January 1 2013
5. Boss Limited desires a 5%
incremental borrowing rate is 7%.
Assume the financial year ends on December 31
Prepare the lease schedule for the lessee
Show working and the balance should be 0.00 or close to 0.00
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