Reference no: EM132951987
Question - On 1 July 2018, HCL TechnologiesLenovo Ltd· Lease term: three years entered into an agreement to lease highly specialized equipment, custom made from . The present value of the equipment on this date was $705,600. The lease agreement contained the following information.
Economic life of equipment: four years
Three annual lease payments of $276,000 on 30 June each year in arrears and an additional final payment of $60,000 at the end of the lease.
Interest rate implicit in the lease: 12%
The lease is non-cancellable.
The equipment will be returned to Lenovo Ltd at the end of the lease period.
Required -
a) Make a lease schedule for HCL Technologies for the lease period.
b) Assuming the lease is classified as a finance lease, prepare general journal entries to record the lease in the books of the lessee for the year ending June 2019. Justify the initial lease and depreciation.
c) Provide an extract of the income statement and the balance sheet of HCL Technologies as at 30 June 2019.
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