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QUESTION 4 Question 4. Total 10 Marks 10 points Suggested time allocation: 18 minutes Oshin Limited enters into a non-cancellable five-year lease agreement with Kim Limited on 1 July 2019. The lease is for an item of machinery. The fair value of the lease at the inception is $1294 3BA The expected economic life of the machinery is six years, after which time it will have an expected residual value of $210,000. There is a bargain purchase option that Oshin Limited could exercise at the end of the year for $280.000. There are five annual payments of $350 000, the first being made on 30 June 2020. Included within the $350.000 lease payments is $35,000, representing payment to the lessor for the insurance and maintenance of the equipment The straight-line basis applies to equipment depreciation. Required: a. Determine the rate of interest implicit in the lease and calculate the present value of the lease payments. (2.5 Marks) b. Prepare the journal entries in the books of Burt Limited for the years ending 30 June 2020 and 30 June 2021. (7.5 Marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B 1 S Paragraph Arial 14px T IO a X X, 83 TTT + Per T 99 92 FP E ) Sell properties WORDS POWERE P 50 point Close Window QUESTION 5 Save All Answers Click Save and Submit to save and submit. Click Save All Answers to save all answers. MacBook Pro QUESTION 4 Question 4. Total 10 Marks 10 points Suggested time allocation: 18 minutes Oshin Limited enters into a non-cancellable five-year lease agreement with Kim Limited on 1 July 2019. The lease is for an item of machinery. The fair value of the lease at the inception is $1294 3BA The expected economic life of the machinery is six years, after which time it will have an expected residual value of $210,000. There is a bargain purchase option that Oshin Limited could exercise at the end of the year for $280.000. There are five annual payments of $350 000, the first being made on 30 June 2020. Included within the $350.000 lease payments is $35,000, representing payment to the lessor for the insurance and maintenance of the equipment The straight-line basis applies to equipment depreciation. Required: a. Determine the rate of interest implicit in the lease and calculate the present value of the lease payments. (2.5 Marks) b. Prepare the journal entries in the books of Burt Limited for the years ending 30 June 2020 and 30 June 2021. (7.5 Marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B 1 S Paragraph Arial 14px T IO a X X, 83 TTT + Per T 99 92 FP E ) Sell properties WORDS POWERE P 50 point Close Window QUESTION 5 Save All Answers Click Save and Submit to save and submit. Click Save All Answers to save all answers. MacBook Pro

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