Gerbert Ltd enters into a finance lease with Hokiman Ltd on 1 July 2012 for an item of machinery that has a fair value at that date of $226 718.The lease is for a period of 4 years,with annual lease payments of $62 000 due on 30 June each year,the first payment to be made in 2013.There is a bargain purchase option of $15 000 available for Hokiman to exercise at the end of the lease period.The rate of interest implicit in the lease is 6%.It cost Gerbert Ltd $190 000 to manufacture the machine.What are the entries in the books of Gerbert Ltd for 1 July 2012 and 30 June 2013 (round amounts to the nearest dollar)?

Question

Quizplus · Accepted Answer

The Answer of Gerbert Ltd enters into a finance lease with Hokiman Ltd on 1 July 2012 for an item of machinery that has a fair value at that date of $226 718.The lease is for a period of 4 years,with annual lease payments of $62 000 due on 30 June each year,the first payment to be made in 2013.There is a bargain purchase option of $15 000 available for Hokiman to exercise at the end of the lease period.The rate of interest implicit in the lease is 6%.It cost Gerbert Ltd $190 000 to manufacture the machine.What are the entries in the books of Gerbert Ltd for 1 July 2012 and 30 June 2013 (round amounts to the nearest dollar)?

Gerbert Ltd Enters into a Finance Lease with Hokiman Ltd