Reference no: EM132840123

Questions -

Q1) Spider Compnay leases a fleet of cars to company B for 5 years. The annual lease payment due at the beginning of the year is 75000 and the rate implicit in the lease is 8%. Company B record the leases under IFRS 16. What is the initial journal entry to set up the lease on company B books?

Q2) On Jan 1, 2020 Hot Fuss Corp purchased a building for 900,000 with the intention of leasing it. The building is expected to have a 20 years life, no residual value, and will be appreciated on a straight line basis. On April 1 2020 under the cancellable lease hot Fuss leased the building to Sam's town company for $300,000 per year ($25,000 a month) for a four year period ending March 31, 2024. Sam's town paid $300,000 to hot fuss on April 1 2020. During the calendar 2020hot Fuss incurred $30,000 in maintenance and other executory costs under the provisions of the lease. This lease is properly classified as an operating lease by both parties.

A) How much income before income taxes will Hot Fuss corp. report from this lease for calendar 2020?

B) How much rent expenses will Sam's town report in connection with this lease for Calendar 2020?