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Posted: January 31st, 2024

On 1 July 2015, Flyer Ltd decides to lease an aeroplane from Finance Ltd.

On 1 July 2015, Flyer Ltd decides to lease an aeroplane from Finance Ltd. The term of the lease is 20 years. The implicit interest rate in the lease is 10 percent. It is expected that the aeroplane will be scrapped at the end of the lease term. The fair value of the aeroplane at the commencement of the lease is $ 2,428,400. The lease is non cancellable, returns the aeroplane to Finance Ltd at the end of the lease, and requires a lease payment of $300,000 on inception of the lease ( on 1 July 2015) and lease payments of $250,000 on 30 June each year (starting 30 June 2016). There is no residual payment required.(a) Provide entries for the lease in the books of Flyer Ltd as at 1 July 2015(b) Provide the entries for the lease in the books of Finance Ltd as at 1 July 2015(c) Provide the journal entries sin the books of Flyer Ltd for the final year of the lease ( that is, the entry in 20 years time).(d) Provide the journal entries in the books of Finance Ltd for the final year of the lease (that is, the entry in 20 years time).

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