Reference no: EM132591729

The following information relates to Dion Ltd. for the year ended 30 June 2018.

$

Cash and cash equivalents                          1,125,000

Inventories                                               425,000

Property Plant and Equipment                       325,000

Accumulated Depreciation on PPE                 (120,000)

Land                                                            115,000

Loan Payable                                                134,000

Accounts Payable                                            95,500

Provision for Warranty                                        42,000

Retained Earnings                                             818,500

Share Capital                                                      890,000

The following transactions are not reflected in the information above:

1. A patent acquired at a cost of $35 500 on 1 July 2017, had an estimated life of 10 years.

2. On 1 July 2017, Dion Ltd., decides to lease an aeroplane from Boeing Ltd. The term of the lease is 20 years. The implicit interest rate is 8%. It is expected that the aeroplane will be scrapped at the end of the lease term.

The fair value of the aeroplane at the commencement of the lease is $2 804 557. The lease is non-cancellable, and the aeroplane is returned to Boeing Ltd. at the end of the lease. It requires a lease payment of $350 000 on inception of the lease and lease payments of $250 000 on 30 June each year.

There is no residual payment required.

3. On 1 Dec 2017, Dion Ltd., issues $1 million in five year debentures that pay interest each six months at a coupon rate of 10 per cent. At the time of issuing the securities, the market requires a rate of return of 8 per cent.

4. Trade receivables paid their account $8900

Required:

Question A. Journalize the above transactions. Show all working.

Question B. Prepare the Statement of Financial Position as at 30 June 2018.