ca,吃0Question 10 - Question 10.2 by the Accounting for...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Question 10.2 Accounting for a finance lease and operating lease by the lessee On 30 June 2015, Jersey Line Ltd entered into a 10 year finance lease for the right to use equipment. The fair value of the equipment at that inception of the lease is $1 200 000. Lease payments are made in advance on 30 June each year. An extract of the lease repayments schedule is as follows: JERSEY LINE LTD Extract of Lease Payments Schedule Minimum lease pay- ments Interest ex- pense Reduction in liability Balance of liability 30 June 2015 30 June 2015 30 June 2016 30 June 2017 $ 160 000 160 000 160 000 $ 98 313 92 144 $ 160 000 61 687 67 856 $ 1 143 131 983 131 921 444 853 588 Required A. Based on the lease repayment schedule, prepare the journal entries of the Jersey Line Ltd to account for the finance lease from 30 June 2015 to 30 June 2017. B. Assume that the agreement is an operating lease and prepare the journal entries of Jersey Line Ltd on that basis. C. Compare the effect of whether the lease is classified as a finance lease or
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern