Reference no: EM132969922

BC Co. (BCC), a December 31 year-end public company, leases specialized optical equipment to clinics across Canada. NS Co. (NSC), also a December 31 year end company has asked for lease terms of highly technical eye scanner equipment.

BCC sent NSC a quote that proposed quarterly payments of $9,177 at the beginning of each quarter.

The following data is provided as a basis for BCC's quote:

• Lease term: 3 years; quarterly payments starting at lease anniversary date
• Estimated useful economic life: 5 years
• Lease start date: August 1, 2020
• The lease contained a bargain purchase option of $10,000 at the completion of the lease agreement.
• Annual rate of return priced into the lease: 6%
• The quarterly lease payments include an amount of $900 pertaining to a maintenance agreement for the equipment which was very attractive to NSC. BCC records any executory costs received from multiple customers to a maintenance expense recovery (credit) account.
• NSC depreciates assets on a straight line basis and is a normal credit risk to BCC

NSC accepts the lease quote and terms of the lease agreement.

Problem 1: Prepare the lease entries for NSC at the lease payment dates for the year and at December 31, 2020.

Problem 2: Prepare, in good form, an excerpted Statement of Financial Position for Nova Scotia Company at December 31, 2020, its financial year end.