Alpine Ltd Signed a 10-Year Non-Cancellable Lease with Mt Buller

question 37

Multiple Choice

Alpine Ltd signed a 10-year non-cancellable lease with Mt Buller Ltd for the use of high-tech equipment. No bargain purchase option is provided in the lease contract.
The following information is available.

What is the amount to be recorded as an asset and a liability in the books of the lessee that is in accordance with AASB 117 "Leases"?

• A) $0;
• B) $120 000;
• C) $125 000;
• D) $200 000;
• E) None of the given answers

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Definitions:

Coupon Rates

The interest rate stated on a bond when issued, which represents the annual interest payment divided by the bond's face value.

Coupon Interest Rate

The rate at which a bond issuer agrees to pay interest to the bondholders, usually expressed as an annual percentage of the face value of the bond.

Yield To Maturity

The total return anticipated on a bond if held until the date it matures, including all payments of interest and principal.

Par Value

The par value, or face value, is the nominal value of a bond or stock at issuance, typically used for accounting purposes and may not reflect the market value.