Question

On 1 July 20X1 Lessee Ltd leased some equipment from Lessor Ltd. The details of the lease arrangement are as follows:

• The lease term was for 4 years
• The interest rate implicit in the arrangement was 8%
• The lessee paid an amount of $20,000 per annum to the lessor commencing on 30 June 20X2
• The residual value at the end of the lease term was $17,000 of this, an amount of $11,000 was guaranteed by the lessee
• $4,000 is the amount of the residual value guarantee that was expected to be payable by the lessee to the lessor at the end of the lease term
• The lessee paid initial direct costs of $1197 at the commencement of the lease

Write in the box below the amount that would be recognised as the Right of Use asset by Lessee Ltd at the commencement of the lease in accordance with the requirements of AASB 16. Do not include any spaces or dollar signs when you write your answer below.

Answer 1