Prepare the minimum lease payment schedule for smith ltd

Assignment Help Financial Accounting
Reference no: EM132918485

Tom Ltd manufactures specialised moulding machinery for both sale and lease. Tom Ltd leased a moulding machinery to Smith Ltd on 1 July 2019 for five years. The machinery has a fair value of $733,974 at the inception of the lease. The machinery is expected to have an economic life of six years, after which time it will have an expected residual value of $100,000. There is a bargain purchase option that Smith Ltd will be able to exercise at the end of the fifth year for $150,000. There are to be five annual lease payments of $200,000, the first being made on 30 June 2020. Included within the $200,000 lease payments is an amount of $20,000 representing payment to the lessor for the insurance and maintenance of the machinery. The machinery is to be depreciated on a straight-line basis. The rate of interest implicit in the lease is 12%.

Required:

Problem a) Prepare the minimum lease payment schedule for Smith Ltd for the first 3 years.

Problem b) Prepare the journal entries in the books Smith Ltd for the years ending 30 June 2020 and 30 June 2021.

Problem c) Prepare the extract of the statement of financial position for the year ending 30 June 2021 and comparative year relating to the lease asset and lease liability in the books of Smith Ltd.

Reference no: EM132918485

Questions Cloud

Illustrate capture of integrated reporting by interest group : Present a critical discussion on at least three factors which clearly illustrate the capture of integrated reporting by various interest groups.
What is business intelligence of golden screen cinema : What is Business Intelligence (BI) of Golden Screen Cinema?
Describe needs-based theories of motivation : Describe Needs-based theories of motivation? Five key elements that can be incorporated to change people's thinking and behavior in organizations
Advise the further audit procedures to be performed : Comment on the financial reporting implications, and advise the further audit procedures to be Performed. You are the manager responsible for audit of Marine.
Prepare the minimum lease payment schedule for smith ltd : Prepare the extract of the statement of financial position for the year ending 30 June 2021 and comparative year relating to the lease asset and lease liability
Assignment on climate change and tourism : Annotated bibliography of the article: Climate Change and Tourism: an approach to its state of knowledge by the authors: Stephany Mancilla Velasco, Maribel Osor
Find average cost of gasoline : The cost of unleaded gasoline in the Bay Area once followed a normal distribution with a mean of $4.74 and a standard deviation of $0.16.
Under-represented and culturally diverse applicants : Write a job description/posting that specifically cultivates under-represented and culturally diverse applicants.
What is the share capital of sport field ltd at december : What is the share capital of sport's field Ltd at 1st of December? It invited the public to subscribe to the issue of 35,000 ordinary shares for $1 per share

Reviews

Write a Review

Financial Accounting Questions & Answers

  Calculate the net income of safety walk company

Calculate the net income of Safety Walk Company. Owner contributed $1,000 cash, ?Paid $500 cash for an office desk, ?Borrowed $2,000 from a local bank

  Accounting equation and record the beginning account balance

As of December 31, 2014, Post Company had total cash of $153,000, notes payable of $85,300, and common stock of $52,100. During 2015, Post earned $33,000 of cash revenue, paid $18,500 for cash expenses, and paid a $2,700 cash dividend to the stockhol..

  What does that expression mean

You receive a shipment of goods from one of your suppliers, On the bill is written: "Terms: 2/7 net 30". What does that expression mean

  Prepare the worksheet for the transactions for the quarter

Margaret requests that you prepare the worksheet for the transactions for the quarter September through to November and Balance Sheet as at the end of November

  How should customer and vendor opening balances be corrected

How should customer and vendor opening balances be corrected if they were entered with an error? Why is it sometimes better to enter customer opening

  What is the required rate of return on the preferred stock

What is the required rate of return (yield) on the preferred stock? The Quaid Brothers Corporation has preferred shares outstanding that pay an annual dividend

  Discuss how property compared to current assets

Property, plant, and equipment is normally audited in a different manner than current asset accounts. Why is this so? Discuss differences in how property, plant, and equipment is audited compared to current assets.

  How are the fund balances reported

What types of funds are listed on the fund financial statements from the CAFR? How are the fund balances reported

  Responsible for preventing and detecting procurement fraud

One of the ACFE recommendations is for "proactive fraud detection". You are in charge of the internal audit function responsible for preventing and detecting procurement fraud. You have a searchable database with the following fields: Explain what th..

  Amounts would be included in computing julies taxable income

Julie is an unmarried individual who lives in a home with her 11-year-old dependent son. Which of the following amounts would be included in computing Julie’s taxable income?

  Find and calculate the today stock price

Find and Calculate the today's stock price. The risk-free rate is 6% and the market risk premium is 5%. Please note that the beta of this stock is 0.8.

  Sustainability in key professions

Discuss the way in which BHP Billiton has demonstrated its social and environmental accountability and consider the above and discuss the stance and initiatives of the Australian accounting profession on corporate social responsibility

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!

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