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Calculate the lease payment schedule by the lessee

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Reference no: EM133172378

Question - 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%

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.

PV of rental payments (43,400-1,340) = 42,060 * 3.5313 148,526

PV of residual value guarantee (9,000 * 0.7084) 6,375.60

Total 154,901.6

The right of use asset is also 154,901.60. It is because there are no other data like initial direct cost paid by the lessee.

Required - Calculate the lease payment schedule by the lessee.

Provide journal entry only for the year 2023.

Reference no: EM133172378

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