Prepare a lease schedule and journal entries for the leased motor vehicle. Useful life = 8...

Prepare a lease schedule and journal entries for the leased motor vehicle. Useful life = 8 years, no residual value.

18 Feb 2020, entered a lease agreement $42,000

Lease term 5 years, the number of monthly lease payments is 60 months (134 days from 18 Feb 2020 to 30 June 2020), the year 2020 = 366 days

The first lease payment of $660 is made in advance, hence no interest on the first payment.

Thereafter, 59 monthly lease payments are due on the 18th day of each. The final payment is due on 18 Jan 2025.

In the final payment, the company also has to make the guaranteed lease residual payment of $10,000, the company intends to pay out the guaranteed lease residual in 5 years time and take full legal possession.

Expert Solution

Internal rate of return on lease asset is 0.483% p.m. (using excel)

Note: Journal entry need to be passed for 60 months in the same manner as 18th Feb 2020.

ekkarill92 answered 2 years ago

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