Problem 3: ABC Co. leased a new machine from XXX Inc. on January 1, 20X1, under a lease with the following information:   Lease term 10 years Annual rent payable at the end of each year P 80,000 Useful life of the machine 12 years Implicit interest rate 14% Lessee’s incremental borrowing rate 12%   The annual rental payment includes P 6,000 to cover maintenance costs. The maintenance costs transfer services to ABC. The amount charged reflects the stand alone selling price of the maintenance services.   Requirements: Provide the entries in 20X1 and 20X2. Determine the current and non-current portions of the lease liability on December 31, 20X1

As a supplier of heavy-duty machineries, Pine Ltd leased a machine to Bulla Ltd on an 8-year non-cancellable lease. The following information is available:  Lease term   8 years i) Residual value at the end of the term   $10 000 Ii) Bargain purchase option at the end of the term   $20 000 iii) Minimum lease payments (at the end of each year)   $120 000 iv) Service costs included in minimum lease payments   $20 000 Rate implicit in the contract   12% Cumulative present value factor at 12% for 8 years   4.9676 Present value factor at 12% for 8th year   0.4039   Required:  Which of the items from i) – iv) above will not be included in determining the leased asset and leased liability at the inception of the lease, and explain why not? ANSWER a):          What is the amount to be recorded as an asset and a liability in the books of the lessee that is in accordance with AASB 16 Leases?

6. Explosive Leasing acquires equipment and leases it to customers under long-term sales-type leases. Explosive earns interest under these arrangements at a 6% annual rate. Explosive purchased a device and then leased it for $342,400 under an arrangement that specified annual payments to be received for five years, beginning at the commencement of the lease. The lessee had the option to purchase the device at the end of the lease term for $49,650 when it was expected to have a residual value of $99,300. Calculate the amount of the annual lease payments. (Do not round intermediate calculations. Round your answer to nearest whole dollar amount.)The present value of $1: n = 5, i = 6% is 0.74726.The present value of an ordinary annuity of $1: n = 5, i = 6% is 4.21236.The present value of an annuity due of $1: n = 5, i = 6% is 4.46511.

Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $366,951. Other information: 5 years $88,000 on January 1 each year 5 years Lease term Annual payments Life of asset Fair value of asset $366,951 Implicit interest rate 10% Incrementa1 rate 10% There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.) View transaction list Journal entry worksheet 1 2 3 Record the entry at the inception of the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018

Markus Computer Company manufactures and sells or leases various types of computer equipment. On 1/1/20, Markus leased a complete                                                computer system to Bellis Enterprises. Data relating to the lease follow:                                                                                                     Cost of equipment to Markus               $72,000                               Fair market value of equipment at 1/1/20               $95,000                               Useful life of equipment               8 years                              Lease term               5 years                              Residual value at the end of the lease                                              (guaranteed by Bellis)               $12,000                               Residual value expected by Bellis               $9,000                               Implicit and incremental interest rates               8%                              Initial…