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Calculate the impact that the lease will have

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Question - On January 1, 2020, Bountee Ltd. leased a machine from Vector Equipment Ltd. The machine had cost Vector $417,200 to manufacture, and would normally have sold for about $596,000. The lease was for 10 years and requires equal monthly payments of $6,570 which reflects an annual interest rate of 9%. While the machine is expected to have a total useful life of 12 years, Bountee's management plans to return it to Vector at the end of the 10-year lease. Bountee's management has also determined that the present value of the minimum lease payments was $518,647 at the time the lease was entered into.

Required -

Calculate the impact that the lease will have in the first month on Bountee's statement of financial position.

Calculate the impact that the lease will have in the first month on Bountee's statement of income.

Reference no: EM133150095

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