and made the following payments to Cant Properties: 9. On June 1, 20x0, Entity A entered into a five-year nonrenewable lease, commencing on that date, for office space (AICPA) 9. On June 1, 20x0, Bonus to obtain lease 30,000 First month's rent 10,000 Last month's rent s10,000 In its statement of financial performance for the year ended June 30, 20x0, what amount should Entity A report as rent expense? a. 10,000 (AICPA) b. 10,500 с. 40,000 d. 50,000
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- Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of 20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is 68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Executory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020.
- Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% a. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability b. What amount will be added to the balance sheet as an asset? Amount added as an asset The rest of the questions are given in pictures below. please answer all parts correctly. i will upvote. thank you!!On January 1, 20x1, DEMENTED Co. leased office furniture from INSANE, Inc. Payments on the lease will be made as follows: YEAR RENTAL PAYMENT Dec. 31, 20x1 200,000 Dec. 31, 20x2 240,000 Dec. 31, 20x3 260,000 700,000 • As an inducement to enter to the lease, INSANE granted DEMENTED the first six months of the lease rent-free. • Additional rent (contingent rent) of 10% is to be paid for any excess of sales of DEMENTED over P2,000,000. DEMENTED'S sales for 20x1, 20x2, and 20x3 are P1,800,000, P2,000,000, and P3,000,000, respectively. • DEMENTED Co. opts to use the recognition exemption for leases of low value asset. Requirement: Provide all the journal entries in the books of DEMENTED (Lessee).On January 1, 20x1, ABC Co. enters into a 4-year lease of office equipment. Annual rental payable at the end of each year is P12,000. As inducement in entering into the lease, the lessor makes the first 3 months of the lease as rent-free. ABC Co. opts to use the practical expedient allowed under PFRS 16 for leases of low value assets. Requirement: Provide the journal entries.
- On September 1, 2021, AYE Company entered into one-year nonrenewable lease, commencing on thatdate, for an office space and made the following payments to XYZ Properties:• Bonus to obtain lease - ₱ 120,000• First month’s rent - ₱ 40,000• Last month’s rent - ₱ 40,000The lease is considered “Short-term lease” in its income statement for the year ended Dec. 31, 2021. What amount should AYE report as rent expense for the year ended, December 31, 2021?9. Lessee enters into a five-year lease of office space on January 1, and concludes that the agreementis an operating lease. Lessee pays initial direct costs of $5,000. The agreement provides thefollowing:Lease term Five years, with the first payment due at leasecommencement and the remainder annually at the leaseanniversary date thereafterAnnual payments, beginning at leasecommencement and annuallythereafterCommencement – $25,000Year 2 – $26,000Year 3 – $27,000Year 4 -- $28,000Year 5 -- $29,000Discount rate 4.0%Present value (PV) of lease payments $124,645Complete the following table to show the impact on each year of Lessee’s income statement andbalance sheet. Prepare the journal entries for the Lessee at the commencement of the lease and atthe end of year 1.Initial Year 1 Year 2 Year 3 Year 4 Year 5Cash lease paymentsIncome statement:Periodic lease expense(straight-line)Prepaid (accrued) rent forperiodBalance sheet at end ofyear:Lease liabilityROU asset:Lease liabilityAdjust:…On January 1, 20x1, Lessor leased an office space to Lessee. Payments on the lease will be made as follows: YEAR RENTAL PAYMENT Dec. 31, 20x1 200,000 Dec. 31, 20x2 240,000 Dec. 31, 20x3 260,000 Total 700,000 • As an inducement to enter to the lease, Lessor granted Lesse the first six months of the lease as rent-free. • Additional rent (contingent rent) of 10% is to be paid for excess of sales of Lessee over P2,000,000. Lessee's sales for 20x1, 20x2, and 20x3 are P1,800,000, P2,000,000, and P3,000,000. respectively. Requirement: Provide all journal entries in the books of Lessor.
- On June 1, 2021 Maroon Company entered into a 5-year nonrenewable lease, commencing on that date, for office space and made the following collections from the lessee: • Bonus to obtain lease, P300,000 First month's rent, P100,000 • Last month's rent, P100,000 In its income statement for the year ended June 30, 2021, what amount should Maroon report as rent income?After the fourth year, the residual value was estimated at The lease provided for a transfer of title to the lessee at the and four year-end rental payments. The lease qualified as a Module4_Lease.pdf x of the asset was P7,994,000. Terms of the lease specify four-year life for the lease, an annual interest rate of 15% Ericson Company leased an asset to another entity. The coet 12 / 19 100% Problem 13-13 (IAA) direct financing lease.. The lease provided for a transfer of title to the lessee After the fourth year, the residual value was estimated P1,000,000. The PV of 1 at 15% for 4 periods is .572, and the PV of a ordinary annuity of 1 at 15% for 4 periods is 2.855. What is the annual rental payment? a. 2,000,000 b. 3,000,350 c. 2,800,000 d. 2,599,650nonrenewable lease, commencing on that date, for office space d. 45,000 7. On June 1, 20x0, Oren Co. entered into a nonrenewable lease, commencing on that date, for office and made the following payments to Cant Properties: (AICPA) five-year space 30,000 Bonus to obtain lease 10,000 First month's rent 10,000 Last month's rent In its income statement for the year ended June 30, 20x0, what amount should Oren report as rent expense? а. 10,000 (AICPA) b. 10,500 с. 40,000 d. 50,000