User Account

All Pages

Calculate the lease liability and the right-to-use asset

Assignment Help Accounting Basics
Reference no: EM133168091

Question - In 2021, Vale do Rio Doce Ltd. had a financial crisis which forced them to make drastic decisions to reduce their operating costs. Vale owned a machine which was important for generating income. However, BHP Billiton could not find a similar machine on the market. Due to their strong relationship, Vale do Rio Doce Ltd. decided to lease their machine to BHP Billiton. On 30 June 2022, BHP Billiton Ltd. leased the machine from Vale do Rio Doce Ltd.

The finance lease agreement contained the following provisions:

Lease term 4 years

Annual rental payment, in advance on 30 June each year (starting at 30/06/2022) $43,400

Estimated useful life of asset 5 years

Estimated residual value of machine at end of lease term $12,000

Residual value guarantee by lessee $9,000

Interest rate implicit in the lease 9%

The lease is cancellable, but only with the permission from the lessor. Included in the annual rental payment is an amount of $1,340 to cover the costs of maintenance and insurance paid for by the lessor. BHP Billiton Ltd. intends to return the machine to the Vale do Rio Doce Ltd.

Required - Calculate the lease liability and the right-to-use asset.

Reference no: EM133168091

Questions Cloud

What is the economic advantage in current dollars : Which offer has the greater economic value using a discount rate of 6% compounded semiannually? What is the economic advantage in current dollars
Determine the amount of gross profit on the income statement : Assuming the perpetual inventory system is used for the financial information presented below: Determine the amount of gross profit on the income statement
What should be the cost of goods sold in the first quarter : What should be the cost of goods sold in the first quarter if Beeson uses perpetual inventory system and LIFO
Who are the stakeholders in this situation : Respond thoroughly to the following questions in your PowerPoint presentation: Who are the stakeholders in this situation
Calculate the lease liability and the right-to-use asset : Annual rental payment, in advance on 30 June each year (starting at 30/06/2022) $43,400. Calculate the lease liability and the right-to-use asset
Explain current reporting requirements for lessee entities : Critically analyse main impacts/implications of the current lease reporting requirements on Australian entities that rely on leased assets in their operations
Make a vertical analysis for best for its income statement : The accounting office has given you the? company's income statement and balance? sheet, Make a vertical analysis for Best for its income statement
Prepare schedule table : Julee Enterprises borrows $30,000 to purchase a new Toyota Highlander by agreeing to a 6%, 4-year note with the bank. Prepare Schedule Table
Determine the classification of the lease option : Determine the classification of the lease option being considered, and indicate what the effect would be on the statement of financial position

Reviews

Write a Review

Accounting Basics Questions & Answers

  What reasons might management have for making the decision

What reasons might management have for making the decision on a large write-off charged in the current period?

  Prepare the necessary journal entry

Mirror Company manufactures and sells different design windows for big buildings. Prepare the necessary journal entry(ies), if any, on 01/07/2015

  When is it permissible to record bad debt expense

When is it permissible to record bad debt expense only at the time when receivables actually prove uncollectible?

  What is the present value of this cash flow pattern

If the appropriate after-tax rate of return is 17.3 percent per year, what is the present value of this cash flow pattern

  Describe overhead and the overhead application process

Describe overhead and the overhead application process. Describe how the over or under application of overhead should be corrected in the accounting records

  At the beginning of the year the firm purchased new

1.the beginning balance of ppampe is 50000 in 2014 and the beginning balance is shown as 80000 in 2015 .2. the firm

  Discuss rules for recording the transactions in the journal

If the company purchases an equipment for cash, why should we credit cash and why should we debit equipment? Discuss in detail the steps

  Calculate at least two ratios that measure profitability

Calculate at least two ratios that help to analyze the stock as an investment.Now that you have crunched the numbers, interpret the ratios.

  What should be the balance in the account

June 9-issued 30,000 shares @ $10 per share. What should be the balance in the account "capital in excess of par value" as of December 31, year 1

  Determine the static budget variances

Tylon's Hardware uses a flexible budget to develop planning information for its warehouse operations. Determine the 20X9 static budget variances

  Prepare all journal entries

Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract

  Journal entries of transactions involving the purchase

Assuming that the US Corp. has a December 31 year end, prepare the necessary journal entries to account for the series of transactions involving the purchase.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd