- QUESTION 1 Green Tea 4 Life Ltd has requested your help in preparing their financial statements as they are unsure of the requirements of NZ IFRS 16 Leases for lessees. You are provided with the following lease details: Green Tea 4 Life Ltd is the Commencement date Lease term Economic life of asset Interest expense SCF classification IDC incurred by the lessee Upfront payment due on the commencement date Fixed payments per annum at year end Ownership transfer at end of lease Lessee's incremental borrowing rate The depreciation method used by the lessee The relevant present value discount factors are: Present value of $1 in n periods Present value of an annuity -5 1-8% Lessee 1 April 2019 5 years 10 years CFOA $10000 $30 000 $200 000 No 8% Straight line 0.6806 3.9927 (i) Prepare the journal entry to initially recognise the ROU asset and lease liability, at the commencement date. (ii) Complete the lessee's table in the space provided. Determine the total interest expense that would be recognised in the Statement of Comprehensive Income over the five years of the lease. (iii) The total interest expense recognised over the five years of the lease would be: (iv) Prepare financial statements to reflect the effects of the lease for the financial years ended 31 March 2020, 31 March 2022, and 31 March 2024
- QUESTION 1 Green Tea 4 Life Ltd has requested your help in preparing their financial statements as they are unsure of the requirements of NZ IFRS 16 Leases for lessees. You are provided with the following lease details: Green Tea 4 Life Ltd is the Commencement date Lease term Economic life of asset Interest expense SCF classification IDC incurred by the lessee Upfront payment due on the commencement date Fixed payments per annum at year end Ownership transfer at end of lease Lessee's incremental borrowing rate The depreciation method used by the lessee The relevant present value discount factors are: Present value of $1 in n periods Present value of an annuity -5 1-8% Lessee 1 April 2019 5 years 10 years CFOA $10000 $30 000 $200 000 No 8% Straight line 0.6806 3.9927 (i) Prepare the journal entry to initially recognise the ROU asset and lease liability, at the commencement date. (ii) Complete the lessee's table in the space provided. Determine the total interest expense that would be recognised in the Statement of Comprehensive Income over the five years of the lease. (iii) The total interest expense recognised over the five years of the lease would be: (iv) Prepare financial statements to reflect the effects of the lease for the financial years ended 31 March 2020, 31 March 2022, and 31 March 2024
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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QUESTION 1
Green Tea 4 Life Ltd has requested your help in preparing their financial statements as they
are unsure of the requirements of NZ IFRS 16 Leases for lessees.
You are provided with the following lease details:
Green Tea 4 Life Ltd is the
Commencement date
Lease term
Economic life of asset
Interest expense SCF classification
IDC incurred by the lessee
Upfront payment due on the commencement date
Fixed payments per annum at year end
Ownership transfer at end of lease
Lessee's incremental borrowing rate
The depreciation method used by the lessee
The relevant present value discount factors are:
Present value of $1 in n periods
Present value of an
annuity
-5
1-8%
Lessee
1 April 2019
5 years
10 years
CFOA
$10000
$30 000
$200 000
No
8%
Straight line
0.6806
3.9927
(i) Prepare the journal entry to initially recognise the ROU asset and lease liability, at the commencement date.
(ii) Complete the lessee's table in the space provided. Determine the total interest expense that would be
recognised in the Statement of Comprehensive Income over the five years of the lease.
(iii) The total interest expense recognised over the five years of the lease would be:
(iv) Prepare financial statements to reflect the effects of the lease for the financial years ended 31 March 2020,
31 March 2022, and 31 March 2024
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