LUSKieso, Intermediate Accounting, 1le, Volume 2 INTERMEDIATE ACCOuNTING 11 (ACC
ID: 2550644 • Letter: L
Question
LUSKieso, Intermediate Accounting, 1le, Volume 2 INTERMEDIATE ACCOuNTING 11 (ACCT 316 n Assignment FULL L SCRE URCES Brief Exercise 20-9 som, Ltd., a public company following ERS 16, reco paye ent of $29 637 on May 2017. The lease requires a total of B annual payments. The eq 2017, Blossom made an adjusting entry to accrue interest expense of $8,050 on the lease de alltof use asset and lease lability t78,ano on Ha. 1. ani, The iteed tate s 9% B a swit som made that kan e na re idual alue A ume hat at December 31 ant as a full r s Prepare Blossom's May 1, 2018 journal entry to record the second lease payment of $29,637. Assume that no reversing entries are mads. (Credit account titles are automstically indented vvhen the amount is entered. Do not indent manually. If no entry is require se ect o Enti tor the aco nttiies and enteroarna aa aine sue t answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Sludy Question Attempts: 0 of 3 used SAVE FOR LATER coedugenshsignmenttest/agistun ENG 2018 03-23 re to searchExplanation / Answer
As per IFRS 16, The lessee will record the leased assets by debiting the right to use of assets and crediting the Lease liability at the present of all future lease payments.
After that ,the interest will be recognized by debting the interest expenses (as an expense) and crediting the lease liability.
At the time of payment, debit the lease liability and credit bank account.
This is asking about the entry at the time of payment which will be as follows :
The interest expenses has already been recorded on Dec 31 2017 increasing the lease liability. now, the payment has been made on May 1, 2018 which has reduced the lease liability. Assuming that payment of 29,637 is including interest. the entries -
on dec 31, 2017
Interest expenses A/c dr. 8,950
To lease liability A/c 8,950
(Being interest exp booked)
Lease liability A/c Dr. 29,637
To Bank A/c 29,637
(being lease installment paid)
shout if there is any doubt.
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