This paper concentrates on the primary theme of DRIVER LTD SIGNS A FIVE YEAR LEASE AGREEMENT WITH BAKEWELL LTD ON 1ST JULY 2019. THE LEASE ISFOR… in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.
Driver Ltd signs a five year lease agreement with Bakewell Ltd on 1st July 2019. The lease isfor new equipment which has at the star of thelease a fair value of $341,755. The equipment isestimated to have a useful life of seven years with no residual value at the end of that time. Driver Ltdhas a bargain purchase option which can be taken up at the end of the lease term for $68,000.The equipment originally cost Bakewell Ltd $272,000. There are five annual lease payments of$85,000 starting on 30th June 2020. Within the $85,000 is an executory payment for insurance, repairsand maintenance of $8,500. A straight-line basis of depreciation has been adopted for the equipment.The rate of interest implicit in the lease is 9 per cent.Required;Prepare the Journal entries for the years ending 30 June 2020 and 30 June 2021 in the books of:(a) Bakewell Ltd and (b) Driver Ltd