Reference no: EM133338950

Question: On 1 July 2022, Aspect Medical Ltd entered into a non-cancellable three-year lease agreement to lease two MRI scanners from Philips Healthcare Ltd. Aspect Medical Ltd paid $35,000 on signing the agreement on 1 July 2022. The contract requires Aspect to make half-yearly lease payments of $280,000, on 30 June and 31 December, each year, commencing on 31 December 2022. Included within the $280,000 half-yearly lease paymentsis an amount of $90,000 representing payment to Philips for insurance and maintenance of the scanners . The scanners are expected to have a useful life of 5 years, after which time it is expected to have a salvage value of $45,000. The bargain purchase option is exercisable by Aspect Medical Ltd at the end of the lease term for $123,000. The equipment is to be depreciated on a straight-line basis. The interest rate implicit in the lease contract is 12% per annum.

a) Calculate the lease liability and lease asset for Aspect Medical Ltd (show workings);

b) full lease schedule for Aspect Medical Ltd., showing the division of the lease rental into interest and principal components; and

c) Provide the journal entries for the lease transactions in the books of Aspect Medical Ltd for the financial year ending 30 June 2023 (from 1 July 2022 to 30 June 2023). Narrations are not required.