Calculate the amount of the lease payments for five years

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Reference no: EM133000159

Vaughn Inc. entered into a five-year lease of equipment from Matusek Inc on July 1, 2021. The equipment has an estimated economic life of eight years and fair value of $275,000. The present value of the lease payments amounts to $237,167. The lease does not have a bargain purchase option and ownership does not transfer to Vaughn at the end of the lease. Interest rate 8.00%

Problem a. Calculate the amount of the lease payments for each of the 5 years assuming the company uses a rate of 8% and lease payments are due at the beginning of each period

Problem b. Prepare a lease schedule for this lease arrangement using the lease payments calculated in a above.

Problem c. Prepare all the journal entries to record the lease obligation and first payment on July 1, 2021 using IFRS rules.

Problem d. Prepare the required journal entries at June 30, 2021 (the company's year end) and the July 1, 2022 lease payment using IFRS rules. (Assume straightline depreciation on the equipment under lease)

Problem e. Discuss how the company would account for this lease if the company followed ASPE. Explain your answer using the rules discussed in our lectures

Problem f. Prepare the company's partial balance sheet (liability section ONLY) at June 30, 2021.

Reference no: EM133000159

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