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    Oroc Ltd hires out industrial plant on long-term operating leases. On 1 January 2011 it entered into a seven-year lease on a mobile crane to Mobaco Ltd. The terms of the lease are $200,000 payable on 1 January 2011, followed by six rentals of $120,000 paid on 1 January 2012 to 2017. Oroc was keen to rent out the crane, and so Mobaco has been given $300,000 up front to cover relocation costs, and the first year’s rental has been waived. The crane will be returned to Oroc on 31 December 2017. The

     


    I need solution of this question Oroc Ltd hires out industrial plant on long-term operating leases. On 1 January 2011 it entered into a seven-year lease on a mobile crane to Mobaco Ltd. The terms of the lease are $200,000 payable on 1 January 2011, followed by six rentals of $120,000 paid on 1 January 2012 to 2017. Oroc was keen to rent out the crane, and so Mobaco has been given $300,000 up front to cover relocation costs, and the first year’s rental has been waived. The crane will be returned to Oroc on 31 December 2017. The crane cost $1,200,000 and has a 25-year useful life with no residual value. Show the required accounting treatment(s) in the records of Oroc Ltd, the lessor, including the income statement; the accruals/prepayments that will appear in the balance sheet at the end of each year of the lease and the disclosure notes as at the end of Year 1.

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