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Unformatted text preview: Past examination paper questions on Leases 1 . According to AASB 117 Leases , because lease payments of a finance lease are made over the lease term, the lessee must divide the payments into the following components: a) reduction of the lease liability b) interest expense incurred c) reimbursement of lessor costs d) receipt of lease incentives e) a), b) and c) ANSWER 2. When substantially all of the risks and rewards incidental to ownership remain with the lessor, the arrangement is treated by the lessee as: a) an operating lease ANSWER b) a finance lease c) a sale and leaseback d) a non-lease, rental arrangement e) cannot determine without information concerning the lessee 3. Adam Limited and Davies Limited enter into a finance lease agreement with the following terms: lease term is 3 years estimated economic life of the leased asset is 6 years 3 x annual rental payments of $23 000; each payment is made in arrears at year end residual value at the end of the lease term is not guaranteed by the lessee interest rate implicit in the lease is 7% On inception date, the present value of the minimum lease payments is: a) $69 000 b) $64 584 c) $64 170 d) $60 359 ANSWER e) $65 713 4. The following is an extract from a lease payment schedule for Lessee Pty Limited. Date Payment Interest @ 12% PV of Lease Liability at year end 30 June 2008 $10,000 $6,349 $49,256 30 June 2009 $10,000 $5,911 ? 30 June 2010 $10,000 $5,420 ? 30 June 2011 $10,000 $4,871 ? The lease payment each year at 30 June is $10,000. What are the amounts of (a) current liabilities; and (b) non-current liabilities, relating to this finance lease, disclosed by Lessee Pty Limited at 30 June 2010 ? Numbers have been rounded to whole dollars. a) (a) current 3,651; (b) non-current 49,256 b) (a) current 4,089; (b) non-current 45,167 c) (a) current 5,129; (b) non-current 35,458 ANSWER d) (a) current 1,633; (b) non-current 17,040....
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- Financial Accounting