Small Ltd signed a 3-year contract with Big Ltd for the use of a machinery on 1 July 2022 with the option to purchase the machinery at the end of the lease term. It is reasonably expected that Small Ltd will exercise the bargain purchase option. The leased machinery meets the criteria of a leased asset in accordance with AASB16 Leases. The following information shows the lease terms: Lease term (non-cancellable):3 years. Expected useful life of the machinery:8 years. Expected residual value of the machinery:$5,000. Residual value guaranteed:$40 000. Expected fair value of the machinery at the end of lease term:$50 000. Bargain purchase price at the end of lease term:$60 000. Net initial directly attributable costs (paid at 1 July 2022):$10 000. Initial lease payment (paid at 1 July 2022):$30 000. Annual lease payment (paid in arrears at 30 June):$80 000. Annual maintenance & insurance included in the annual lease payment:$10 000. Interest rate implicit in the lease:10% p.a. Required: How much initial lease liability that Small Ltd. should recognise on 1 July 2022 (rounded to the nearest dollar) in accordance with the requirements of AASB 16 Leases?

ABC Ltd signed a 4-year contract with Comp Ltd for the use of a customised machinery on 1 July 2022.ABC Ltd intends to return the asset at the end of the lease term. The leased machinery meets the criteria of a leased asset in accordance with AASB16 Leases. The following information shows the lease terms: Lease term (non-cancellable) 4 years Expected useful life of the machinery 6 years Expected fair value of the machinery at the end of lease term $30 000 Residual value guaranteed $50 000 Bargain purchase price at the end of lease term $60 000 Net initial directly attributable costs (paid at 1 July 2022) $8 000 Annual lease payment (paid in arrears) $70 000 Interest rate implicit in the leaseWhat is the amount to be recorded as a Non-current Lease Liability in the books of ABC Ltd that is in accordance with AASB16 Leases on 30 June 2023? Group of answer choices $174,080 $189,106 $138,017 $121,488

On 1 July 20X5, Bow Ltd leased equipment to Tie Ltd.  The terms of the contract are as follows:Lease term10 yearsEconomic life of the equipment13 yearsAnnual lease payment, in arrears (commencing 30 June 20X6)$2,500Fair value of the equipment at 1 July 20X5$19,517Residual value at end of lease (not guaranteed)$2,000Residual value at end of economic lifenilInterest rate implicit in lease6%PV factor of $1 at end of one year0.9434PV factor for annuity of $1 per year for 10 years (6%)7.3601PV factor of annuity of $1 per year for 13 years (6%)8.8527PV factor of $1 at end of 10 years (6%)0.5584The lease is non-cancellable, and at the end of the lease the equipment will be returned to Bow (lessor). The lease has been classified as a finance lease by Bow.What is the reported amount of the current liability (rounded to the nearest whole dollar) in the balance sheet of the lessee at the end of 30 June 20X7 in accordance with the requirements of AASB 16 Leases?

On 1 July 2021, Pretty Ltd leases a machine with a fair value of $109 444 to Cool Ltd for 5 years for an annual lease payment (payable in advance) of $25 000, and Cool Ltd guarantees in full the estimated residual value of $15 000 on return of the asset. Petty Ltd does not incur any initial direct costs in preparing the lease agreement. What would be the interest rate implicit in the lease? Group of answer choices 9% 14% 12% 10%

Fast Ltd manufactures specialised moulding machinery for both sale and lease. On 1 July 2023, Fast Ltd leased a machine to Furious Ltd. The machine being leased cost Fast Ltd $235  000 to make and its fair value at 1 July 2023 is considered to be $260 629. The terms of the lease agreement are as follows. Lease term 5 years Annual payment, payable in arrears on 30 June each year $65 000 Estimated economic life of machine 8 years Estimated residual value of machine at end of economic life $2 000 Estimated residual value of machine at end of lease term $9 000 Residual value guaranteed by Furious Ltd $6 000 Interest rate implicit in the lease 7% The annual payment includes an amount of $3 000 to cover annual maintenance and insurance costs. Furious Ltd may cancel the lease but only with the permission of the lessor. Furious Ltd intends to lease another machine from Fast Ltd at the end of the lease term. Fast Ltd incurred $2 500 in initial direct costs to set up the lease agreement. Required 1. Classify the lease for Fast Ltd. Justify your answer. 2. Prepare: a. the lease receipts schedule for Fast Ltd b. the journal entries in the books of Fast Ltd for the year ended 30 June 2024. 3. Assuming that Furious Ltd can cancel the lease without incurring any penalties, prepare the journal entries in the books of Fast Ltd for the year ended 30 June 2024.

According to AASB 16 Leases a right-of-use asset is required to be. A depreciated over the lease term, where the cost of the right-of-use lease asset reflects that the lesseewill exercise the purchase option at end of the lease termo B depreciated over the underlying asset's useful life, where the cost of the lease asset reflects that thelessee will exercise the purchase option at end of the lease termo C depreciated over the longer of the lease term and its useful life of the right-of-use lease asset, wherethe lessee will not obtain ownership at the end of the lease termo D depreciated from lease commencement to the longer of the lease term and its useful life, only wherethe economic benefits to be realised from using the asset are for a period of greater than ten years