Question
In: Accounting
ABC entered into a lease agreement with XYZ on 1 Jan 2015. The leased asset was...
ABC entered into a lease agreement with XYZ on 1 Jan 2015. The leased asset was purchased by XYZ for 180,000£ on 1 Jan 2015. It has a useful economic life of 5 years. The lease period is 4 years. ABC pays XYZ four annual instalments of 60,000£ each payable at the beginning of each financial year starting on 1 Jan 2015. The cost of capital for ABC is expected to be 8% per annum for the foreseeable future. The accounting year-end for ABC is 31 December. ABC uses the Sum of Digits method in allocating the finance charge over the lease period. Show how the lease agreement should be accounted for in the Income statement for the year ended and the statement of financial position of ABC as at 31 Dec 2015.
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ekkarill92 answered 1 year agoRelated Solutions
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