Question 2
Lease Agreement-Kimberly Clark-Corp
Date of Agreement 31/12/16
Annual Rent $68,299/-
Rate of Interest 8%
Residual Value $12000/-
Expected life 12 years
Lease period 10 years
A |
Jounral Entries |
Amount in $ |
||
31-12-2016 |
Leasehold Asset |
3,72,428 |
||
Sheffield Storage Company |
3,72,428 |
|||
31-12-2016 |
Sheffield Storage Company |
68,299 |
||
Bank |
68,299 |
|||
31-12-2017 |
Amortisation of Leased Asset |
37,243 |
||
Leasehold asset |
37,243 |
|||
31-12-2017 |
Sheffield Storage Company |
33,722 |
||
Finance Charges |
34,577 |
|||
Bank |
68,299 |
|||
31-12-2018 |
Amortisation of Leased Asset |
37,243 |
||
Leasehold asset |
37,243 |
|||
31-12-2018 |
Sheffield Storage Company |
36,420 |
||
Finance Charges |
31,879 |
|||
Bank |
68,299 |
|||
B |
Right to use the Asset |
3,66,977 |
||
C |
Lease Liability |
3,99,693 |
||
Notes |
||||
Calculation of Amortisation |
||||
Estimated PV of Lease value |
3,72,428 |
|||
Residual Value |
NA |
|||
Expected Value |
$ 7,800 |
|||
Estimated Life |
12 Years |
|||
Amortisation period |
10 Years |
|||
Amortisation on Straight Line |
||||
(372428)/10 |
37,243 |
|||
Lease Liability |
||||
0 |
31-12-2016 |
68,299 |
1.00 |
68299 |
1 |
31-12-2017 |
68,299 |
1.08 |
63240 |
2 |
31-12-2018 |
68,299 |
1.17 |
58555 |
3 |
31-12-2019 |
68,299 |
1.26 |
54218 |
4 |
30-12-2020 |
68,299 |
1.47 |
46483 |
5 |
30-12-2021 |
68,299 |
1.85 |
36900 |
6 |
30-12-2022 |
68,299 |
2.72 |
25113 |
7 |
30-12-2023 |
68,299 |
5.03 |
13568 |
8 |
29-12-2024 |
68,299 |
13.69 |
4989 |
9 |
29-12-2025 |
68,299 |
68.91 |
991 |
10 |
29-12-2026 |
68,299 |
943.44 |
72 |
372428 |
||||
Lease Liability-As changed As decrease in yearly lease payments |
||||
0 |
31-12-2016 |
67,299 |
1.00 |
67299 |
1 |
31-12-2017 |
67,299 |
1.08 |
62314 |
2 |
31-12-2018 |
67,299 |
1.17 |
57698 |
3 |
31-12-2019 |
67,299 |
1.26 |
53424 |
4 |
30-12-2020 |
67,299 |
1.47 |
45803 |
5 |
30-12-2021 |
67,299 |
1.85 |
36360 |
6 |
30-12-2022 |
67,299 |
2.72 |
24746 |
7 |
30-12-2023 |
67,299 |
5.03 |
13369 |
8 |
29-12-2024 |
67,299 |
13.69 |
4916 |
9 |
29-12-2025 |
67,299 |
68.91 |
977 |
10 |
29-12-2026 |
67,299 |
943.44 |
71 |
366977 |
||||
Calculation of Amortisation |
||||
Estimated PV of Lease value |
3,66,977 |
|||
Residual Value |
NA |
|||
Expected Value |
$ 7,800 |
|||
Estimated Life |
12 Years |
|||
Amortisation on Straight Line |
||||
(366977)/10 |
36,698 |
|||
Lease Liability-As changed Yearly Insurance charges paid to Lessor |
||||
0 |
31-12-2016 |
73,299 |
1.00 |
73299 |
1 |
31-12-2017 |
73,299 |
1.08 |
67869 |
2 |
31-12-2018 |
73,299 |
1.17 |
62842 |
3 |
31-12-2019 |
73,299 |
1.26 |
58187 |
4 |
30-12-2020 |
73,299 |
1.47 |
49886 |
5 |
30-12-2021 |
73,299 |
1.85 |
39601 |
6 |
30-12-2022 |
73,299 |
2.72 |
26952 |
7 |
30-12-2023 |
73,299 |
5.03 |
14561 |
8 |
29-12-2024 |
73,299 |
13.69 |
5354 |
9 |
29-12-2025 |
73,299 |
68.91 |
1064 |
10 |
29-12-2026 |
73,299 |
943.44 |
78 |
399693 |
||||
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