(Answered) Question - b ltd entered into a lease agreement with d ltd

Accounting

Question - B Ltd entered into a lease agreement with D Ltd for the purpose of leasing an item of plant. The following terms are relevant.

The fair value of the plant was $10,000 and had an estimated useful life of 6 years but ownership was to remain with D Ltd, the lessor, at the end of the lease period.

The lease period was for 5 years commencing 1 January 2004.

The annual lease rentals that were payable on 31 December amounted to $2,571

Required - Show how interest would be allocated over the lease period using the sum actuarial (given an implicit interest rate) method. The implicit interest rate is 9%.

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