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Unformatted text preview: n 1 July
2001. The terms of the lease agreement are as follows:
1. The lease is for 4 years with no renewal option and is cancellable only with the
permission of the lessor.
2. Lease payments of Malaysian Ringgit (MR) 60,000 per year are due on 1 July
every year with the first payment made on the signing the lease contract.
3. The fair value of the equipment on 1 July, 2001 is MR400,000 and has an
economic life of 7 years with no salvage value.
4. Integrity depreciates similar machinery it owns on a straight-line basis.
5. Promet uses a rate of 10% p.a. in computing the lease payments and it depreciates
the equipment on a straight-line basis.
6. Integrity net profit before tax for the year ended 2000 was $150,000 and the net
book value of its fixed assets was $800,000 at 31 December 2000.
7. The exchange rates of S$ to MR are as follows:
1 July 2001
31 December 2001 MR1.00 = S$0.46
MR1.00 = S$0.47 TABLE: Present Value of $1 After n Periods
10.0% 0.90909 0.82645 0.75131 0.683...
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- Spring '14