Question

Question 21

Gordon Ltd leases a mining helicopter from Freeman Ltd. The terms of the lease are as follows: The lease is to commence on 1 July 2020. The lease is to last for 3 years. Lease payments are to be made annually and in advance. The first payment is to be made on 1 July 2020. Each lease payment is to amount to $100 000. At the end of the lease, the expected residual value of the helicopter is $50 000. Gordon Ltd guarantees the residual value of the helicopter in full. The interest rate implicit in the lease is 5%. At the start of the lease, what amount should Gordon Ltd use to record the right to use asset in their books?

		$372 325
		$285 941
		$315 517
		$329 133

Question 22

Gabriel Ltd leases a siphoning filter from Logan Ltd. The terms of the lease are as follows: The lease is to commence on 1 July 2020. The lease is to last for 4 years. Lease payments are to be made annually in arrears. The first payment is to be made on 30 June 2021. Each lease payment is to amount to $5 000. At the end of the lease, the expected residual value of the filter is $3 000. Gabriel Ltd guarantees $2 000 of the residual value. The interest rate implicit in the lease is 4%. At the start of the lease, at what amount should Gabriel Ltd record the right to use asset in their books?

		$19 859
		$20 585
		$18 149
		$20 714

Answer 1

21. the present value of minimum lease payments should be discounted at the implicit rate of return for obtaining the

right to use.

Year	Minimum lease payment	Discounting rate = 1/1.05^n	Present value
0	100000	1	100000
1	100000	0.952381	95238
2	100000	0.907029	90703
3	50000	0.863838	43192
		Total	329133

option d

22.

the present value of minimum lease payments should be discounted at the implicit rate of return for obtaining the

right to use. only guaranteed residual value should be considered for the lease payments.

Year	Minimum lease payments	Discounting rate = 1/1.05^n	Present value
1	5000	0.961538	4808
2	5000	0.924556	4623
3	5000	0.888996	4445
4	5000	0.854804	4274
4	2000	0.854804	1710
		Total	19859

option a