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

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Reference no: EM132603784

Question - Skysong 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 $320,000

Economic life of leased equipment 7 years

Annual rental payments starting Jan. 1, 2020 $58,323

Option to purchase at the end of the term none

Depreciation method Straight-line

Residual value none

Skysong's incremental borrowing rate 10%

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 amortization schedule for the term of the lease to be used by Skysong. Use Excel.

Prepare the journal entries on Skysong 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: EM132603784

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