Prepare journal entery in books of lessee for first two year

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Point 1: A lease was signed on April 2010 for five years. Annual rentals payable at beginning of year were agreed at Rs.8247.42. Useful life of equipment was 8 years and interest rate implicit in the lease was 12%. Fair value of equipment was Rs.35,000. The lease contains a bargain purchase option of Rs.3,000.

Year-end of lessee is December 31.

Required:

Question 1: In the books of lessee, Prepare

(i) Lease amortization schedule

(ii) Journal entries in the books of lessee for first two years.

(iii) Interest expenses to be reported in profit and loss accounts for years ended December 31, 2010 through 2015.

(iv) Extracts from Lessee

Reference no: EM132496388

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