What is the interest expense that swift ltd should record

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Reference no: EM132986369

Taylor Ltd entered into a lease arrangement with Swift Ltd on 1 July 2019 for four years. A lease payment of $85,000 are made on 30 June every year, with first payment to be made on 30 June 2020. The implicit interest rate in the lease is 8%. Swift Ltd determined that this contract is non-renewable and contains a lease component. The leased equipment is expected to have an economic life of seven years, after which time it will have an expected salvage value of $15,000. The reporting date for both Taylor Ltd and Swift Ltd is 30 June.

Below was the journal entry recorded on the book of Swift Ltd on 1 July 2019:

Dr Right-of-use Asset $348,500
Cr Lease Liability $348,500

Do not include commas and dollar sign ($) in your answer. Present $1,000 as 1000.

Problem 1: What is the interest expense that Swift Ltd should record for the financial year ended on 30 June 2020?

Problem 2: What is the depreciation expense that Swift Ltd should record for the financial year ended on 30 June 2020?

Problem 3: What is the balance of Lease Liability on Swift Ltd's balance sheet at 30 June 2020?

Problem 4: What is the carrying amount of the leased equipment on the book of Swift Ltd as at 30 June 2023?

Reference no: EM132986369

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