Which of the entries to record the sale that tomfoolery make

Assignment Help Financial Accounting

Reference no: EM132714488

Problem 1: Tomfoolery Ltd enters into a sale-and-leaseback arrangement for an aircraft it owns. The resulting lease is classified as a finance lease. The details are as follows: Carrying amount of asset $50 000, Proceeds from sale of asset $60 000, Annual lease payment amount $8000. According to AASB 117, Tomfoolery should make which of the following entries to record the sale:

Select one:

a. No entry is required as Tomfoolery will still own the asset in an economic sense

b. Dr Aircraft $60 000, Cr Cash at bank $50 000 ,Cr Deferred gain on sale $10 000

c. Dr Cash at bank $60 000, Cr Aircraft $50 000, Cr Deferred gain on sale $10 000, Dr Aircraft under lease $60 000, Cr Lease liability $60 000

d. Dr Cash at bank $60 000, Cr Aircraft $50 000, Cr Gain on sale income $10 000, Dr Aircraft under lease $60 000, Cr Lease liability $60 000

Reference no: EM132714488

Questions Cloud

Compute what will account be worth at end of twelve years : Find What will your account be worth at the end of 12 years? If you deposit K16,000 per year for 12 years (each deposit is made at the end of each year)

What is defined as the sum of the lease payments received : What is defined as the sum of the lease payments received by a lessor under a finance lease and any unguaranteed residual value accruing to the lessor?

List some adverse effects of alcohol consumption : List some adverse effects of alcohol consumption Alcohol can cause both obesity and malnutrition. Explain why

Which is not expected to have the potential to be affected : Which is not expected to have the potential to be affected by the new leasing approach being developed by IFRS 16? Debt covenants

Which of the entries to record the sale that tomfoolery make : Which of the entries to record the sale that Tomfoolery should make? Tomfoolery Ltd enters into a sale-and-leaseback arrangement for an aircraft it owns.

Which is a factor considered by the lessor : Which is a factor considered by the lessor at the commencement date regarding the possible termination of a lease? The amount of any fixed payments

Maintain biodiversity in ecosystems : Why do you think it is important to maintain biodiversity in ecosystems? What is prohibiting humans from doing so?

What is defined as the non-cancellable period : What is defined as the non-cancellable period for which the lessee has a right to use an underlying asset? Bargain-purchase window

What story could you tell as part of your audit report : What story could you tell as part of your audit report? Where could you come up with other ideas for a story that would make your audit report more effective?

User Account

All Pages