(Answered) Question - on 1 july 2011 cerise ltd leased a crane from

Accounting

Question - On 1 July 2011, Cerise Ltd leased a crane from Azure Ltd. The crane cost Azura Ltd $120,697. The lease agreement contained the following provisions:

Lease term	3 years
Estimated useful life of crane	4 years
Annual lease payment, payable on 30 June each year	$39,000
Estimated residual value of crane at end of lease term	$22,000
Residual value guaranteed by Cerise Ltd	$16,000
Interest rate implicit in lease	7%

The lease is cancellable only with the permission of the lessor.

Required:

(a) Classify the lease for Cerise Ltd.

(b) Prepare the lease payment schedule for Cerise Ltd and its journal entries to record the lease for the year ended 30 June 2012.

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