Reference no: EM132631194

On 1 July 20X1 Lessee Ltd leased some equipment from Lessor Ltd. The details of the lease arrangement are as follows:

1. The lease term was for 6 years
2. The interest rate implicit in the arrangement was 8%
3. The lessee paid an amount of $13,000 per annum to the lessor commencing on 1 July 20X1
4. The residual value at the end of the lease term was $22,000 of this, an amount of $19,000 was guaranteed by the lessee
5. $4,000 is the amount of the residual value guarantee that was expected to be payable by the lessee to the lessor at the end of the lease term
6. The lessee paid initial direct costs of $1,821 at the commencement of the lease
7. The leased asset will be returned to the lessor at the end of the lease term

Problem 1: What is amount that would be recognised by Lessee Ltd as the Right of Use Asset at the commencement of the lease?