King Lessee Ltd leases an item of equipment on 1 July 20X1 on the following terms: Term of lease (years) Interest rate implicit in lease Initial lease payment up front on 1 July 20X1 8 10% $4,500 zero Subsequent lease payments, in arrears, each 30 June 10 Initial direct costs paid by King Lessee Useful life of equipment (years) $12,000 Assume straight line depreciation method is used for the lease asset and residual value is zero at the end of the lease term. At the end of the lease term, King Lessee is going to return the equipment to the lessor. What is the amount of the current lease liability and non-current lease liability at 30 June 20X2, each rounded to nearest hundred dollars? O Current liability $5600 Non-current liability $58,000 Current liability $6,200 Non-current liability $52,300 Current liability $5,800 Non-current liability $58,400 ☑ О Current liability $6,200 Non-current liability $58,400 O Current liability Non-current liability $5,600 $52,300

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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King Lessee Ltd leases an item of equipment on 1 July 20X1 on the following terms:
Term of lease (years)
Interest rate implicit in lease
Initial lease payment up front on 1 July 20X1
8
10%
$4,500
zero
Subsequent lease payments, in arrears, each 30 June
10
Initial direct costs paid by King Lessee
Useful life of equipment (years)
$12,000
Assume straight line depreciation method is used for the lease asset and
residual value is zero at the end of the lease term.
At the end of the lease term, King Lessee is going to return the equipment to
the lessor.
What is the amount of the current lease liability and non-current lease liability at 30 June 20X2,
each rounded to nearest hundred dollars?
O
Current liability
$5600
Non-current liability
$58,000
Current liability
$6,200
Non-current liability
$52,300
Current liability
$5,800
Non-current liability
$58,400
☑
О
Current liability
$6,200
Non-current liability
$58,400
O
Current liability
Non-current liability
$5,600
$52,300
Transcribed Image Text:King Lessee Ltd leases an item of equipment on 1 July 20X1 on the following terms: Term of lease (years) Interest rate implicit in lease Initial lease payment up front on 1 July 20X1 8 10% $4,500 zero Subsequent lease payments, in arrears, each 30 June 10 Initial direct costs paid by King Lessee Useful life of equipment (years) $12,000 Assume straight line depreciation method is used for the lease asset and residual value is zero at the end of the lease term. At the end of the lease term, King Lessee is going to return the equipment to the lessor. What is the amount of the current lease liability and non-current lease liability at 30 June 20X2, each rounded to nearest hundred dollars? O Current liability $5600 Non-current liability $58,000 Current liability $6,200 Non-current liability $52,300 Current liability $5,800 Non-current liability $58,400 ☑ О Current liability $6,200 Non-current liability $58,400 O Current liability Non-current liability $5,600 $52,300
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