Reference no: EM132490574

The following facts are for a non-cancellable lease agreement between Sandhill Corporation and Russell Corporation, a lessee:

Inception date - July 1, 2020

Annual lease payment due at the beginning of each year, starting July 1, 2020 --------- $21,431.83

Bargain purchase option price at end of lease term reasonably certain to be exercised by Russell ---------- $3,500.00

Lease term ---------- 5 years

Economic life of leased equipment ------------- 10 years

Lessor's cost $42,400.00

Fair value of asset at July 1, 2020 ---------------- $90,000.00

Lessor's implicit rate ---------------- 11%

Lessee's incremental borrowing rate ---------------11%

Point 1: The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties about costs that have not yet been incurred by the lessor. The lessee assumes responsibility for all executory costs. Both Russell and Sandhill use IFRS 16.

Question 1: Calculate the amount of the right-of-use asset and lease liability. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 52.75.)