On January 1, 2020, Sahali Air Inc. enters into an 8-year lease agreement to lease an airplane to Duoprop Airlines, with payments required at the end of each year. Sahali follows IFRS. The following information relates to this agreement: Duoprop Airlines has the option to purchase the airplane for $7,000,000 at the end of the lease, at which time the airplane’s fair value is expected to be $12,000,000. The airplane cost Sahali Air $30,000,000. It has an estimated useful life of 15 years, and a residual value of zero at the end of that time (due to technological obsolescence). Duoprop will pay all executory costs related to the leased airplane. Annual year-end lease payments of $4,562,339.49 will allow Sahali Air to earn an 8% return on its investment. Instructions What type of lease is this for the lessor? Justify your answer. Prepare a lease amortization schedule for the lessor, Sahali Air, for the first two years (2020 and 2021). Round all amounts to the nearest dollar. Prepare the journal entries on Sahali Air’s books to record the lease agreement, to reflect payments received under the lease, and to recognize income for the years 2020 and 2021.

Burt Ltd enters into a non- cancellable 5 years lease agreement with Earnie Ltd on 1 July 2023. The lease is for an item of machinery that, at the inception of the lease, has a fair value of $1,023,032. The machinery is expected to have an economic life of 7 years, after which time it will have an expected residual value of $250,000. There is a bargain purchase option that Burt ltd will be able to exercise at the end of 5th year for $200,000.There are to be 5 annual payments of $300,000, the first being made on 3o June 2024. Included within the $300,000 lease payments is an amount of $40,000 representing payment to the lessor for the insurance and maintenance of the equipment. The equipment is to be depreciated on a straight-line basis. REQUIRED (a) Determine the rate of interest implicit in the lease and calculate the present value of the minimum lease payments. (b) Prepare the journal entries in the books of Burt Ltd for the start of the agreement and for the years ending 30 June…

Leewin Brokerage enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $78,000 under a 5-year lease on December 20, 2022. The lease commences on January 1, 2023, and Leewin will return the automobile to Bumble on December 31, 2027. The automobile has an estimated useful life of 7 years. Leewin made a lease payment of $10,700 on December 20, 2022. In addition, the lease agreement stipulates annual payments of $10,700, due on January 1 of 2023, 2024, 2025, 2026, and 2027. The implicit rate of the lease is 4% and is known by Leewin. There is no purchase option, no lease incentives, no residual value guarantees, and no transfer of ownership. Leewin incurs initial direct costs of $2000.Assuming that this is classified as an operating lease, how much interest expense is recorded in 2023? Group of answer choices $1554 $2140 $0 $1982

On 10 December 2019, Food Complex Inc. (a private company) entered into a nine-year agreement to lease equipment from Williams Ltd. The terms of the lease are as follows: The lease term will begin on 1 January 2020. The fair value of the equipment at the inception of the lease is $180,100. The equipment's expected useful life is nine years, at which time it will be obsolete. Food Complex Inc.'s incremental borrowing rate is 9%. Lease payments are $25,300 per year, payable at the beginning of each lease year. That is, the first payment will be due January 1, 2020. The implicit rate in the lease is 10%. Food Complex Inc. applies ASPE accounting standards. Required: Should Food Complex Inc. account for this lease as a capital lease or an operating lease? Explain your answer using all of the ASPE criteria discussed in class. Show your computations to support the PV calculations.