Prepare entry for the first payment on July

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Question - Sunland Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of its office locations. Sunland leased 59 machines from Coffee Tyme Ltd. on July 1, 2020. (To purchase the coffee machines instead would have cost Sunland $413 per machine, and the machines would have lasted an estimated five years.) The lease calls for semi-annual payments for the next three years, in the amount of $32 per machine. The payments start on July 1, 2020. At the end of the three-year period, the machines will have to be returned to the lessor.

Required -

1. Prepare entry for the first payment on July 1, 2020.

2. Would your entry for the first payment differ if Sunland followed ASPE?

Reference no: EM132493428

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