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: 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

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?

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%

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

Gentle Ltd leases manufacturing equipment from Soft Ltd. The lease is non-cancellable, and Gentle Ltd has the right to purchase the equipment at the end of the lease term for $50,000. Which of the following statements is true?Gentle Ltd is the lessor of the equipment.Gentle Ltd controls the equipment but does not have legal ownership of the equipment.Gentle Ltd does not have control over the equipment.Gentle Ltd has legal ownership of the equipment.