Crane 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 important uncertainties about costs that have not yet been incurred by the lessor. Assuming that Crane Leasing desires a 8% rate of return on its investments Excel functions to calculate the amount of the annual rental payment that is required. Annual rental paymentPrepare an amortization schedule using a spreadsheet that would be suitable for the lessor for the lease term. Please show how to do this in excel I seem to be struggling thank you in advance.

Lease is the term which is used in accounting and it is defined as the arrangement that is…

Answered: rane Leasing Limited, which has a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Crane 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 important uncertainties about costs that have not yet been incurred by the lessor.

Assuming that Crane Leasing desires a 8% rate of return on its investments Excel functions to calculate the amount of the annual rental payment that is required.

Annual rental payment

Prepare an amortization schedule using a spreadsheet that would be suitable for the lessor for the lease term.

Please show how to do this in excel I seem to be struggling thank you in advance.

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