rane Leasing Limited, which has a fiscal year end of October 31 and follows IFRS 16, signs an agreement on January 1, 2020, to lease equipment to Irvine Limited. The following information relates to the agreement. 1.   The term of the non-cancellable lease is six years, with no renewal option. The equipment has an estimated economic life of eight years. 2.   The asset’s cost to Crane, the lessor, is $314,000. The asset’s fair value at January 1, 2020, is $314,000. 3.   The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $45,374, which is not guaranteed. 4.   Irvine Limited, the lessee, assumes direct responsibility for all executory costs. 5.   The agreement requires equal annual rental payments, beginning on January 1, 2020. 6.   Collectibility of the lease payments is reasonably predictable. There are no

On January 1, 2020, Flower Corp. enters into an agreement with Nicki Rentals Inc. to lease a machine from them. Both corporations adhere to ASPE. The following data relate to the agreement:(i)  The term of the non-cancellable lease is three years with no renewal option. Payments of $ 543,244 are due on December 31 of each year.(ii)   The fair value of the machine on January 1, 2020, is $ 1,400,000. The machine has a remaining economic life of 10 years, with no residual value. The machine reverts to the lessor upon the termination of the lease.(iii)    Flower depreciates all its machinery on a straight-line basis. (iv)    Flower’s incremental borrowing rate is 10%. Flower does not have knowledge of the 8% implicit rate used by  Nicki. (v)     Immediately aftersigning the lease, Nicki discovers that Flower is the defendant in a lawsuit that is sufficiently material to make collectability of future lease payments doubtful.   From Flower’s viewpoint, what type of lease is this?…

Dineshbhai

Glaus Leasing Company agrees to lease equipment to Jensen Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2020, is $700,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $50,000. Jensen estimates that the expected residual value at the end of the lease term will be $50,000. Jensen amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Glaus desires a 5% rate of return on its investments. Jensen's incremental borrowing rate is 6%, and the lessor's implicit rate is unknown. Instructions (Assume the accounting period ends on…