Lease 1 - The first lease is for office furniture with a lease term of 5 years and lease payments of $1,000 per annum in advance. Comex will keep the furniture at the end of the lease term. Lease 2 - The second is for machinery with a lease term of 5 years starting January 1, 2020 and payments of $10,000 payable annually on January 1st. Comex incurs indirect costs at January 1, 2020 amounting to 3,200. The machinery will revert to the Liveter Group Ltd at the end of the lease term. The machinery has an unguaranteed residual value of $8,000. The economic life of the machinery is 6 years. Required a) As the financial controller for Comex you have been asked by the CFO to prepare the amortization schedules as required and journal entries for the year ended December 31, 2020.
Lease 1 - The first lease is for office furniture with a lease term of 5 years and lease payments of $1,000 per annum in advance. Comex will keep the furniture at the end of the lease term.
Lease 2 - The second is for machinery with a lease term of 5 years starting January 1, 2020 and payments of $10,000 payable annually on January 1st. Comex incurs indirect costs at January 1, 2020 amounting to 3,200. The machinery will revert to the Liveter Group Ltd at the end of the lease term. The machinery has an unguaranteed residual value of $8,000. The economic life of the machinery is 6 years.
Required
a) As the financial controller for Comex you have been asked by the CFO to prepare the amortization schedules as required and
year ended December 31, 2020.
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