07-24-2014, 05:02 PM
MGT401 Financial Accounting Assignments No:2 Solution Spring Semester 2014 DUE DATE: 25 july 2014
Case
RS Company has entered into a contract to obtain the machinery on lease from Soneri
leasing Company on 1st July 2009.
Fair value of the asset is Rs. 950,000;
Lease rentals are 5 annual installments of Rs. 219,450 starting from 30th June 2010.
The implicit interest rate is approximately 5% per annum in this lease contract.
Depreciation is charged on written down method at 20%.
Required:
1) Show how this lease would be presented in the accounts of the lessee (lease
amortization schedule) for entire lease term.
2) Show journal entries that are to be recorded in the books of lessee for the financial
year 2009 to 2010.
3) Also mention the charges that have to be disclosed in income statement for the
year ended June 30th
2010 and for the year ended June 30
th 2011, in the books of lessee.
IMPORTANT:
24 hours extra / grace period after the due date are usually available to
overcome uploading difficulties. This extra time should only be used to meet
the emergencies and above mentioned due dates should always be treated as
final to avoid any inconvenience.
GUIDELINES:
Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only
Case
RS Company has entered into a contract to obtain the machinery on lease from Soneri
leasing Company on 1st July 2009.
Fair value of the asset is Rs. 950,000;
Lease rentals are 5 annual installments of Rs. 219,450 starting from 30th June 2010.
The implicit interest rate is approximately 5% per annum in this lease contract.
Depreciation is charged on written down method at 20%.
Required:
1) Show how this lease would be presented in the accounts of the lessee (lease
amortization schedule) for entire lease term.
2) Show journal entries that are to be recorded in the books of lessee for the financial
year 2009 to 2010.
3) Also mention the charges that have to be disclosed in income statement for the
year ended June 30th
2010 and for the year ended June 30
th 2011, in the books of lessee.
IMPORTANT:
24 hours extra / grace period after the due date are usually available to
overcome uploading difficulties. This extra time should only be used to meet
the emergencies and above mentioned due dates should always be treated as
final to avoid any inconvenience.
GUIDELINES:
Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only