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):$70 000 Interest rate implicit in the lease 10%p.a Required: Which journal entries that ABC needs to record on 1 July 2022 in relation to the lease contract? Group of answer choices Dr ($) Cr ($) ROU Asset 243,551 Lease liability 235,551 Cash 8,000 Dr ($) Cr ($) ROU Asset 221,891 Lease liability 221,891 Dr ($) Cr ($) ROU Asset 229,891 Lease liability 221,891 Cash 8,000 Dr ($) Cr ($) ROU Asset 235,551 Lease liability 235,551 Flag question: Question 4 Question 41 pts What 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 Flag question: Question 5 Question 51 pts A soft toys retailer (Customer) enters into a 3-year contract with a multi-level shopping centre operator (Supplier) to use a kiosk space in its shopping centre to sell its soft toys. The contract specifies the kiosk size of the space and that the space can be located at any one of the levels within the shopping centre. The Supplier has the right to change the location of the kiosk space allocated to the Customer at any time during the contract period at minimal costs. The Supplier has many available spaces of the same kiosk size which meet the criteria specified in the contract. Customer uses its own kiosk that it can move easily to sell its soft toys. Which of the following is correct in accordance with AASB 16 Leases? Group of answer choices The contract is a lease as the Supplier does not have substantive substitution rights over the kiosk space. The contract is a lease as the size of the kiosk space is specifically stated in the contract. The contract is a lease as the Customer has control over the kiosk. The contract does not contain a lease because there is no identified asset. Flag question: Question 6 Question 61 pts The information below is for both Questions 6 and 7. 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? Group of answer choices $219,159 $244,027 $198,948 $174,080 Flag question: Question 7 Question 71 pts What is the amount of depreciation expense that Small Ltd should recognise for the year ended 30 June 2023 (rounded to the nearest dollar) in accordance with the requirements of AASB 16 Leases? Group of answer choices $32,395 $84,720 $31,770 $26,770 Flag question: Question 8 Question 81 pts 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% Flag question: Question 9 Question 91 pts Under AASB 16/IFRS 16 Leases, lessees are required to disclose which of the following? I. Interest expense on lease liabilities II. Income from subleasing right-of-use assets III. Gains or losses arising from sale and leaseback transaction IV. Expenses relating to short-term leases Group of answer choices II, III and IV only. I, II, III and IV only. I, II and III only. I, III and IV only. Flag question: Question 10 Question 101 pts Which of the following statements is not correct in accordance with the requirements of AASB 16 Leases? Group of answer choices The commencement of the lease is the date from which the lessee is entitled to exercise its right to use the underlying asset. After initial recognition, right-of-use assets are depreciated. The lease liability recognised at the commencement of the lease term represents the present value of future lease payments. A right-of-use asset is required to be depreciated over the lease term, where the cost of the right-of-use lease asset reflects that the lessee will exercise the purchase option at end of the lease term. No new data to save. Last checked at 22:22 Questions AnsweredQuestion 1 AnsweredQuestion 2 Haven't Answered YetQuestion 3 Haven't Answered YetQuestion 4 Haven't Answered YetQuestion 5 Haven't Answered YetQuestion 6 Haven't Answered YetQuestion 7 Haven't Answered YetQuestion 8 Haven't Answered YetQuestion 9 Haven't Answered YetQuestion 10 Time Running: Attempt due: Sep 1 at 22:00 31 Minutes, 59 Seconds logo 🎁 Refer & Reward 🎈 Get Your 100 Free Queries! Invite your friends to get 100 free queries! Your friends also get 100 free queries! 🎁 Get Now! 👏 Welcome Back! What would you like to chat about? Quick command: Answer question Input: A customer (manufacturer) has a contract with a supplier (train operator) for the use of 10 specified railway carriages of a particular type (for freight) for a period of 10 years. The customer is only able to use the carriages between Melbourne and Perth, and the types of freight are restricted to those specified in the contract. The contract requires the supplier to allow the carriages to be attached to existing timetabled freight train services it runs between Melbourne and Perth and provide additional engines as and when required. Which of the following is correct in accordance with AASB 16 Leases? the contract for the freight carriages is a lease because the Supplier has control of an identified asset the contract does not contain a lease because there is no identified train asset the contract for the freight carriages is a lease because the Customer has control of an identified asset the engines are right-of-use leased assets Chat The correct answer is "the contract for the freight carriages is a lease because the Customer has control of an identified asset". According to AASB 16 Leases, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In this case, the customer (manufacturer) has the right to control the use of the specified railway carriages (identified assets) for a period of 10 years in exchange for consideration. The customer has the right to obtain substantially all of the economic benefits from use of the asset and has the right to direct the use of the asset. Therefore, the contract for the freight carriages is a lease. The engines are not necessarily right-of-use leased assets unless they are specifically identified in the contract and the customer has the right to control their use. The contract only mentions that the supplier will provide additional engines as and when required, but does not specify that the customer has control over these engines. Therefore, it cannot be definitively stated that the engines are right-of-use leased assets. Text from your selection Which of the following statements is correct in accordance with AASB 16 Leases?Group of answer choicesVariable lease payments may be increased or decreased during the lease term because of changes in facts and circumstances occurring after the asset is made available to the lessee to use, other than the passage of time.Payment for executory costs reimbursed by the lessee after being paid by the lessor on behalf of the lessee are included in the calculation of lease payments.Right-of-use asset is depreciated from lease commencement to the longer of the lease term and its useful life, only where the economic benefits to be realised from using the asset are for a period of greater than ten years.Payments that are made by a lessee at commencement date are included in the initial amount recognised for the lease liability. What would you like to do with the text? → Answer question Chat The correct statement in accordance with AASB 16 Leases is "Payments that are made by a lessee at commencement date are included in the initial amount recognised for the lease liability." According to AASB 16, lease payments that are made at or before the commencement date, other than those payments that are for costs the lessor incurs to fulfill the lease, should be included in the initial measurement of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. The other statements are incorrect. Variable lease payments may change due to changes in an index or rate, not due to changes in facts and circumstances. Executory costs are not included in the calculation of lease payments. The right-of-use asset is generally depreciated over the shorter of the asset's useful life and the lease term, not the longer. Text from your selection Which of the following statements is correct in accordance with AASB 16 Leases?Group of answer choicesVariable lease payments may be increased or decreased during the lease term because of changes in facts and circumstances occurring after the asset is made available to the lessee to use, other than the passage of time.Payment for executory costs reimbursed by the lessee after being paid by the lessor on behalf of the lessee are included in the calculation of lease payments.Right-of-use asset is depreciated from lease commencement to the longer of the lease term and its useful life, only where the economic benefits to be realised from using the asset are for a period of greater than ten years.Payments that are made by a lessee at commencement date are included in the initial amount recognised for the lease liability. What would you like to do with the text? → Answer question Chat The correct statement in accordance with AASB 16 Leases is "Payments that are made by a lessee at commencement date are included in the initial amount recognised for the lease liability." According to AASB 16, lease payments that are made at or before the commencement date, other than those payments that are for costs the lessor incurs to fulfill the lease, should be included in the initial measurement of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. The other statements are incorrect. Variable lease payments may change due to changes in an index or rate, not due to changes in facts and circumstances. Executory costs are not included in the calculation of lease payments. The right-of-use asset is generally depreciated over the shorter of the asset's useful life and the lease term, not the longer. Text from your selection 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 yearsExpected useful life of the machinery6 yearsExpected fair value of the machinery at the end of lease term$30 000Residual value guaranteed$50 000Bargain purchase price at the end of lease term$60 000Net initial directly attributable costs (paid at 1 July 2022)$8 000Annual lease payment (paid in arrears) $70 000Interest rate implicit in the lease10% p.a. Required:Which journal entries that ABC needs to record on 1 July 2022 in relation to the lease contract? What would you like to do with the text? → Answer question

 Lease liability

 Cash

 Lease liability

 Lease liability

 Cash

 Lease liability