On 1st January 2018, Dragonland SAOG entered into an agreement to lease an item of equipment from a manufacturer for 6 years. The lease requires five annual payments of RO 50,000 each commencing from 1st January 2018. The equipment would have a useful life of six years and with no residual value. The present value of the total lease payments is OMR 240,000. The cost of capital used is 14% find the interest to be charged to the income statement and the depreciation on the leased equipment for the year ended 31st December 2018. Interest charges OMR 26,600 depreciation OMR 48,000 Interest charges OMR 33,600 depreciation OMR 48,000 None of them Interest charges OMR 26,600 depreciation OMR 40,000

Financial Accounting: The Impact on Decision Makers
10th Edition
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Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.7E
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Muzna Salim Mohammed AISaadi
On 1st January 2018, Dragonland SAOG entered into an agreement to lease an item of equipment from a manufacturer for 6
years. The lease requires five annual payments of RO 50,000 each commencing from 1st January 2018. The equipment would
have a useful life of six years and with no residual value. The present value of the total lease payments is OMR 240,000. The cost
of capital used is 14% find the interest to be charged to the income statement and the depreciation on the leased equipment for
the year ended 31st December 2018.
Interest charges OMR 26,600 depreciation OMR 48,000
Interest charges OMR 33,600 depreciation OMR 48,000
None of them
Interest charges OMR 26,600 depreciation OMR 40,000
A lessee should initially measure a lease liability at:
03:56
EN
AE all
T-T/-V/
31
Transcribed Image Text:Muzna Salim Mohammed AISaadi On 1st January 2018, Dragonland SAOG entered into an agreement to lease an item of equipment from a manufacturer for 6 years. The lease requires five annual payments of RO 50,000 each commencing from 1st January 2018. The equipment would have a useful life of six years and with no residual value. The present value of the total lease payments is OMR 240,000. The cost of capital used is 14% find the interest to be charged to the income statement and the depreciation on the leased equipment for the year ended 31st December 2018. Interest charges OMR 26,600 depreciation OMR 48,000 Interest charges OMR 33,600 depreciation OMR 48,000 None of them Interest charges OMR 26,600 depreciation OMR 40,000 A lessee should initially measure a lease liability at: 03:56 EN AE all T-T/-V/ 31
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