Anumpa Ltd leased an item of Machinery from Imlie Ltd for a period of five years. The Machinery has a useful life of 12 years. There is no purchase option available at the end of the
lease term.
The monthly rental lease payment is $90,000 over the next five years.
The following are additional details pertaining to the lease agreement:
Rent in advance $2,000
Term in years 5
Interest rate implicit 6%
Fair value of leased assets $5,500,000
PV of Lease Payments $4,500,000
Total lease payments ?
Required:
a) Calculate the total lease payments. (2 marks)
b) Classify the lease under IAS 17. Provide reasons (show calculations) to support your
answer. (5 marks)
c) How would the current lease be recognized under IFRS 16? (5 marks)
d) Prepare a lease schedule and provide journal entries in the books of Anumpa Ltd for the
first 3 years of lease agreement. (18 marks)
Assume interest expense for the five years are calculated as follows:
Year Interest Expense
1 $420,000
2 $212,000
3 $188,000
4 $48,000
5 $32,00

Self-interest achieve society’s economic goals because producers know which goods consumers want the most. as consumers and producers exercise their freedom to act in their own self-interest, markets will produce the desired goods at the lowest possible cost. consumers and producers both operate based on society’s economic goals. consumers know which goods can be produced at the lowest cost. there is a wide variety of desired goods and services in a market system because producers determine what to produce. consumers change their minds frequently. there is always a need to produce something new and improved. individual wants are diverse. what is produced is ultimately determined by consumers, because if the goods offered are not what consumers want, consumers will not buy them. producers, because they are driven by profits. producers, because they determine what to produce. consumers, because they participate in marketing surveys.

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?

Record the journal entry for the provision for uncollectible accounts under each of the following independent assumptions: a. the allowance for doubtful accounts before adjustment has a credit balance of $500. b. the allowance for doubtful accounts before adjustment has a debit balance of $250. c. assume that octoberʼs credit sales were $70,000. uncollectible accounts expense is estimated at 2% of sales. smith, gaylord n.. excel applications for accounting principles (p. 51). cengage textbook. kindle edition.