Criss Ltd decided to lease from Cross Ltd a motor vehicle on 1 July 2020 that had a fair value of $80,000.
The lease agreement contained the following provisions:
Lease term (non-cancellable)
Annual rental payments in arrears (commencing 30/6/21)
Guaranteed residual value
Expected residual value
Interest rate implicit in the lease
3 years
S30,000
$6,000
$10.000
12% The expected useful life of the vehicle is 5 years. At the end of the 3-year lease term, the car was returned to
the lessor.
Required
Both companies apply AASB 16 "Leases" for the accounting treatment of lease transactions.
a. Calculate the present value of lease payments (show all workings). b. Prepare the lease schedule for the lessee.