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On the date of 1/1/2019, the construction company leased a machine from the Arab Company...

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Accounting

On the date of 1/1/2019, the construction company leased a machine from the Arab Company for a period of 3 years, and its useful life is 7 years, in return for an annual rental payment of 16,000 dinars to be paid at the beginning of each year in cash. To complete the contract, the tenant incurred direct initial costs of 6000 dinars in cash. If the implicit interest rate is not specified in the lease contract, and the interest rate on the additional borrowing of the lessee is 12% annually. The straight-line method is used to depreciate the machines of the lessee.

Required : 1- Preparing the lease contract payments schedule in accordance with the requirements of IFRS 16.

2- Preparing all entries relating to the lease contract in the books of the lessee in accordance with the requirements of IFRS 16.

3- Explain the impact of the lease contract on the financial statements of the lessee on 31/12/2020

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