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:

Present Value

The contemporary monetary evaluation of a future sum of money or series of cash flows, discounted by a particular rate of return.

Payment Plan

An agreement to pay back a sum of money owed over a period of time in a series of installments.

Account Earning

Interest or returns generated from an investment account or savings account over a period.