Helpful pic is a finance company. It purchased computer equipment for R78 500 and leased it to Chatroom Ltd under a three year lease with three payments of R29 000 payable annually in advance. Chatroom Ltd agreed to also pay R830, which represented the cost of setting up the lease. What amount will be recognised in the Helpful pic balance sheet at the end of the first year? Select one: O a. R55 363 O b. R55 330 O c. R49 500 O d. R50 330
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- Helpful plc is a finance company. It purchased computer equipment for R78 500 and leased it to Chatroom Ltd under a three year lease with three payments of R29 000 payable annually in advance. Chatroom Ltd agreed to pay R830, which represented the cost of setting up the lease. At the end of the first year, the balance sheet reported a balance of R55 363. The implicit rate of interest is 10%. What amount will be recognised in the Helpful plc income statement as interest in the second year? Select one: a. R5 536 b. R2 636 c. R830 d. R29 000Evans Ltd leases their equipment from Mitchell Co. The typical arrangement that Evans have with Mitchell Co. is that the asset is typically leased for the length of its useful life. On 1 January 2021, a new machine was leased for which annual payments of £200,000 are made. The implicit interest rate is 10%. How would Evans treat this transaction in their financial statements of the current year? Provide calculations where you find relevant.Baltimore Ltd entered into a contract to acquire a vehicle from BryanstonMotors. The lease term as well as the economic life of the vehicle is fiveyears. The cash price of the vehicle is R180 000. The lease liability is payablein annual instalments of R45 082 from 1 May 2019. The interest rate implicit in the lease is 8%. Baltimore Ltd paid attorney fees of R800 in respect of the lease agreement. It is the accounting policy of Baltimore Ltd to depreciate vehicles over five years on a straight‐ line basis.Required:Q.1.2.1 In terms of IFRS16 – Leases briefly discuss why the above contractis a lease.Q.1.2.2 Complete the amortisation schedule for the lease of the vehicle.Round all amounts to the nearest rand.Q.1.2.3 Calculate the depreciation for the reporting period ending31 March 2020 in the books of the lessee. All answers must comply with the requirements of International FinancialReporting Standards (IFRS), in particular IFRS16 – Leases.All calculations must be shown as marks will be…
- WBC Ltd entered into a contract to acquire a vehicle from BMWMotors. The lease term as well as the economic life of the vehicle is fiveyears. The cash price of the vehicle is $180 000. The lease liability is payablein annual instalments of $45 082 from 1 October 2018. The interest rate implicitin the lease is 8%. WBC Ltd paid attorney fees of $800 in respect of thelease agreement. It is the accounting policy of WBC Ltd to depreciatevehicles over five years on a straight‐ line basis. 2. Complete the amortisation schedule for the lease of the vehicle. Round all amounts to the nearest $.3. Calculate the depreciation for the reporting period ending 31 September 2019 in the books of the lessee.Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an equipment for a cost of P2,300,000. It immediately leased the equipment to Sushmita & Co. on January 1, 2020. Lease term is 6 years, and after the end of the lease term, title will transfer to the lessee. Annual lease payments are made at the start of each year, starting January 1, 2020. The machine’s residual value is P200,000. Implicit rate of the lease is 12%. Below PV factors are provided in relation to the implicit rate:· PV of annuity in advance at 12% for 6 periods: 4.60· PV of 1 at 12% for 6 periods: 0.51How much is the annual rental? a. 477,826 b. 500,000 c. 559,610 d. 460,000Pam D. Corp. decided to enter the leasing business. Dumbrique acquired a specialized packaging machine for P2,300,000. On January 1, 2020, the entity leased the machine for a period of six years, after which title to the machine is transferred to the lessee. The six annual lease payments are due each January 1 and the first payment was made on January 1, 2020. The residual value of the machine is P200,000. The lease term are arranged so that a return of 12% is earned by the lessor. The PV of 1 at 12% for six periods is 0.51, the PV of an annuity in advance of 1 at 12% for six periods is 4.60 and the PV of an ordinary annuity of 1 at 12% for six periods is 4.11 39. What is the annual lease payment payable in advance required to yield the desired return?40. What is the total financial revenue?
- The Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance.Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings wasR125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. The landwould be classified as_______.Select one:a.an accounting leaseb.a finance leasec.a financial leased.an operating leaseCassandra Company decides to enter the leasing business. The entity acquires a specialized packaging machine for P3,000,000 cash and leases it for a period of 6 years after which the machine is to be returned to Cassandra Company for disposition. The guaranteed residual value of the machine is P200,000. The lease term is arranged so that a return of 12% is earned by Cassandra Company. 1. What is the annual rental payable in advance required to yield the desired return?On 1 January 2021 Jackson Limited signed a lease for a machine on the following terms: - Ten half yearly payments of £74,000 in advance -Note the Interest rate inherent in the lease is 3% per half year -The present value of the lease payments is £650,000. - The useful economic life of the machine is 10 years. - Jackson paid a separate company Malenfant Installation £50,000 to deliver and install the machine. Required Show the entries in Jackson Limited's Statement of profit or loss and other comprehensive income and Statement of Financial Position at 31 December 2021 and 31 December 2022.
- Indiana Ltd decided to lease from Jones Ltd a car that had a fair value at 30 June 2019 of $38 960. The lease agreement contained the following provisions. The expected useful life of the vehicle is 5 years. At the end of the 3-year lease term, the car was returned to Jones Ltd, which sold it for $10 000. The annual rental payments include an amount of $1200 to cover the cost of maintenance and insurance arranged and paid for by Jones Ltd. Interest rate is 5% pa 1.prepare the lease payments schedule for Indiana Ltd (show all workings) 2.the journal entries in the records of Indiana Ltd from 30 June 2019 to 30 June 2020.On 1 January 1, 20x9 Brix Co entered into an agreement to lease a machine that had an estimated life of five years. The lease period is also four years at which point the asset will be returned to the leasing company. Brix Co is required to pay for all maintenance and insurance costs relating to the asset. Annual rentals of $10,000 are payable in advance from January 1, 20x9. The machine is expected to have a nil residual value at the end of its life. The machine had a fair value of $35,000 at the inception of the lease. The lessor includes a finance cost of 10% per annum when calculating annual rentals. a) How should the lease be accounted for in the financial statements of Shrub for the year end 31 December 20x9? b) Record the journal entries for the lease…On 1 January 2022 (the contract date), Furniture Ltd sold R1 200 000 worth offurniture to a new housing development in Centurion. Furniture Ltd immediatelycredited their sales revenue with the R1 200 000. Included in the sales contract, wasa complementary servicing arrangement in which Furniture Ltd would provide thecustomer with annual servicing of the furniture (in case of any breakages ormanufacturing faults) for a period of three years from the date of the contract.The normal selling price of the furniture without any annual servicing is R1 400 000.The normal price charged to customers for annual servicing is R14 000.REQUIRED:Calculate the amount of revenue that Furniture Ltd should recognise, for thefinancial year end of 30 June 2022, with respect to the transaction above.Ignore the time value of money and VAT.