- 15 Marks
FR – L2 – Q41 – Financial Reporting Standards and Their Applications
Show extracts from Cypress Limited's 20X4 financial statements for leases of a threshing and baling machine.
Question
On 1 January 20X4, Cypress Limited entered into the following lease agreements.
(a) Threshing machine
A lease of a threshing machine for 3 years from Alpha Ltd.
A deposit of GH¢2,000,000 was payable on 1 January 20X4 followed by 3 instalments of GH¢6,500,000 payable in arrears, commencing on 31 December 20X4. The present value of future lease payments is GH¢16,752,000 and the interest rate implicit in the lease is 8%.
(b) Baling machine
A lease of a baling machine for 5 years from Beta Ltd.
Cypress Limited has agreed to make 5 annual instalments of GH¢35,000 payable in advance, commencing on 1 January 20X4. The present value of future lease payments is GH¢150,000.
The interest rate implicit in the lease is 8.36%.
Required
Show the relevant extracts from the accounts of Cypress Limited for year ended 31 December 20X4.
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