Initial Measurement of Right-Of-Use Asset and Lease Liability

question 7

Essay

Initial measurement of right-of-use asset and lease liability
Larry Co.leases a fleet of vehicles to Curly Co. for 5 years. The annual lease payment, due at the beginning of the year is $ 75,000 and the rate implicit in the lease is 8%. Curly Co. records leases under IFRS 16. What is the initial journal entry to set up the lease on Curly Co.'s books?

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Definitions:

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one economic variable from the influence of others.

Normative Economics

A branch of economics that deals with value judgments about what the economy should be like, focusing on what ought to be rather than what is.

Post Hoc

Post hoc refers to a logical fallacy where it is assumed that if one event occurs after another, it must have been caused by the first event.

Inductive Reasoning

A method of reasoning in which specific observations or sets of observations are used to make broad generalizations.