Reference no: EM132490578

Ivanhoe Leasing Corporation, which uses IFRS 16, signs a lease agreement on January 1, 2020, to lease electronic equipment to Wai Corporation, which also uses IFRS 16. The term of the non-cancellable lease is two years and payments are required at the end of each year. The following information relates to this agreement.

Point 1. Wai Corporation has the option to purchase the equipment for $11,200 upon the termination of the lease and this option is reasonably certain to be exercised.

Point 2. The equipment has a cost and fair value of $170,000 to Ivanhoe Leasing Corporation. The useful economic life is two years, with a residual value of $11,200.

Point 3. Wai Corporation is required to pay $6,500 each year to the lessor for insurance costs.

Point 4. Ivanhoe Leasing Corporation wants to earn a return of 7% on its investment.

Point 5. Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs that have not yet been incurred by the lessor.

Question 1: Using time value of money tables, a financial calculator, or Excel functions, calculate the lease payment that Ivanhoe Leasing would require from Wai Corporation. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 52.75.)