Crane Limited, a public company following IFRS 16, decided to upgrade the coffee
ID: 341498 • Letter: C
Question
Crane Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of its office locations. Crane leased 45 machines from Coffee Tyme Ltd. on July 1, 2017 (to purchase the coffee machines instead would cost Crane $315 per machine, and the machines would have lasted an estimated five years). The lease calls for semi-annual payments for the next three years, in the amount of $32 per machine. The payments start on July 1, 2017. At the end of the three-year period, the machines will have to be returned to the lessor Prepare the entry for the first payment on July 1, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit July 1 Would your entry for the first payment differ if Crane followed ASPE? The entry the same under ASPE.Explanation / Answer
Entry for the First Payment -
In given case,
1. Machine will be retured to lessor at the and of lease tearm
2. Lease period is 3 years which is less than 75% of useful life of asset.
3. The assets is of general nature.
4. Minimum lease payment doesn't exceeds 90% of lease property.
So, The entry is same under ASPE
Jul-01 Lease Reantal Expense $ 1,440.00 Cash $ 1,440.00 (45 x $32)