Calculate amount of right-of-use asset and lease liability

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Reference no: EM133140400

Question - Sunland Corp., which uses IFRS, signs non-renewable, non-cancellable lease agreement to lease robotic equipment from Xiu Inc. The following information concerns the lease agreement.

Inception date

January 1, 2020

Lease term

5 years

Fair value of equipment Jan. 1, 2020

$340,000

Economic life of leased equipment

7 years

Annual rental payments starting Jan. 1, 2020

$57,871

Option to purchase at the end of the term

none

Depreciation method

Straight-line

Residual value

none

Sunland's incremental borrowing rate

6%

Required -

Using (1) factor tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the right-of-use asset and lease liability.

Prepare the initial entry to reflect the signing of the lease agreement.

Prepare an amortization schedule for the term of the lease to be used by Sunland. Use Excel.

Prepare the journal entries on Sunland Corp.'s books to record the payments related to this lease for the years 2020 and 2021 as well as any adjusting journal entries at its fiscal year ends of December 31, 2020 and 2021.

Reference no: EM133140400

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