Question

Question 32

Whiterun Ltd owned a boat that has an economic useful life of 6 years as at 1 July 2020. On 1 July 2020 the company leased the boat to Riverwood Ltd for three years. In the lease agreement, Riverwood Ltd agreed to guarantee $5 000 residual value. The annual lease payment is $30,000. Lease payments are to be made in arrears. The interest rate implicit in the lease for Riverwood Ltd is 5%. What is the amount of Riverwood Ltd's lease liability on the commencement day of the lease?

		$86 017
		$56 017
		$90,012
		$80 012

Answer 1

$86,017

Yr	Annual Payment	Interest rate implicit	Lease liability
1	30,000.00	0.95	$            28,571
2	30,000.00	0.91	$            27,211
3	30,000.00	0.86	$            25,915
3	5,000.00	0.86	$              4,319
			$            86,017