Solution:
Particulars | UoM | Amount | ||
annual lease payments | USD | 19000 | ||
Interest rate | % | 5 | ||
Lease period | years | 6 | ||
Extension period | years | 3 | ||
Yr | Lease payments | Discounting | PV | |
1 | 19000 | 0.952380952 | 18,095 | |
2 | 19000 | 0.907029478 | 17,234 | |
3 | 19000 | 0.863837599 | 16,413 | |
4 | 19000 | 0.822702475 | 15,631 | |
5 | 19000 | 0.783526166 | 14,887 | |
6 | 19000 | 0.746215397 | 14,178 | |
114,000 | 96,438 | |||
Journal entry to record the right of use of asset and lease liability | ||||
(in USD) | ||||
Date | Particulars | Dr | Cr | |
01-Jan-18 | Right of use of asset | 96438 | ||
Lease liability | 96438 | |||
Journal entry to record interest and amortisation | ||||
Date | Particulars | Dr | Cr | |
31-Dec-18 | Lease Rent | 18095 | ||
Interest | 905 | |||
Cash | 19000 | |||
31-Dec-18 | Depreciation | 16073 | ||
Accumulated depreciation | 16073 | |||
(Being depreciation accounted on right of use; 96438/6 years) | ||||
15 On January 1, 2018, Rick's Pawn Shop leased a truck from Chumley Motors for a...
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