$100,000 $85,000 $20,711 $5,000 Lessee expected salvage value $8,000 4% Asset FMV Asset Book Value January 1 payments Guaranteed Salvage Value Implicit and incremental rates Five-year lease; five-year asset
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- mpany purchaseda Problem 10-32 (IFRS) under a finance At the beginning of current year, Southstar Company leased a building with the following information: ity were originally Annual rental payable at the end of each lease year Initial direct cost paid Lease incentive received Lease bonus paid to lessor before commencement of lease Present value of cost of restoring the building as required by contract discounted at 8% Purchase option that is reasonably certain Lease term Useful life of building Implicit inierest rate Present value of an ordinary annuity of 1 at 10% for 6 periods Present value of 1 at 10% for 6 periods 1,500,000 405,000 50,000 300,000 lated depreciation and the remaining 0,000. -P1,500,000 cash. 945,000 1,000,000 6 years 10 years 10% 4.36 0.56 of the machinery 1. What amount should be recorded initially as cost of right of use asset? a. 8,750,000 b. 8,700,000 c. 9,900,000 d. 7,755,000 2. What amount should be recorded as annual depreciation of the right of the asset?…Reardon Company leased an asset from Mackinac Company. Data: ● ● ● ● . Five-year, noncancellable lease begins 1/1/22. Asset life is five years Payments of $20,711 each January 1. Asset FMV $100,000; Lessor book value $85,000 Guaranteed salvage value $5,000; $1,500 salvage value expected by lessee Applicable rate is 4% Reardon's 12/31/22 Right of Use asset balance will be approximately Select one: O a. $79,259 O b. $78,923 O c. $76,712 O d. $79,013 Oe. $76,137SMC Inc. leased a machine on January 1,2011 to SM Inc. with the following pertinentinformation:Annual rental payable at the beginning of each year P500,000Lease term 5 yearsUseful life of machine 6 yearsFair value of machine on January 1,2011 2,400,000Incremental borrowing rate of lessee 14%Implicit interest rate of lessor known to lessee 12%Bargain purchase option at the end of lease term 100,000Residual value of the machine 200,000Initial direct cost incurred by lessee 300,000Prepaid bonus paid by lessee 400,000Estimated restoration cost in which lessee has contractual obligation 1,000,000Except from the fact that there is a guaranteed residual value of P300,000 by the lessee instead of bargain purchase option and theannual rental is payable at the end of each yearRequired: Based on your audit, determine the following:____________4. Book value of right of use asset on December 31, 2012____________5. Current Lease Liability on December 31,2011____________6. Noncurrent Lease Liability…
- SMC Inc. leased a machine on January 1,2011 to SM Inc. with the following pertinentinformation:Annual rental payable at the beginning of each year P500,000Lease term 5 yearsUseful life of machine 6 yearsFair value of machine on January 1,2011 2,400,000Incremental borrowing rate of lessee 14%Implicit interest rate of lessor known to lessee 12%Bargain purchase option at the end of lease term 100,000Residual value of the machine 200,000Initial direct cost incurred by lessee 300,000Prepaid bonus paid by lessee 400,000Estimated restoration cost in which lessee has contractual obligation 1,000,000Problem 14: Except from the fact that there is a the guaranteed residual value of P300,000 by the lessee instead of bargain purchase option and the annual rental is payable at the end of each yearRequired: Based on your audit, determine the following:____________1. Initial amount recognized as right of use asset____________2. Initial amount recognized as leased liability____________3. Depreciation…Fitbit Ltd has leased a machine on the following terms:Date of entering lease 1 July 2019Duration of lease 5 yearsLife of asset 6 yearsUnguaranteed residual value $40,000Lease payments inception (at the start) $60,000Annual payments (5) $65,000Implied rate11.0 %Required:Determine the Fair Value (rounded off) of the leased asset. (East Company leased a new machine from North Company on January 1, 2014 under a lease with the following information: Annual rental payable at beginning of each lease year 400,000Guaranteed residual value 200,000Initial direct cost 150,000Estimated cost of restoration 300,000Lease incentive received 50,000Lease term 10 yearsUseful life of machine 12 yearsImplicit interest rate 14%Present value of an ordinary annuity for 10 periods at 14% 5.22Present value of an ordinary annuity for 9 periods at 14% 4.95Present value of an ordinary annuity for 8 periods at 14% 4.64Present value of 1 for 10 periods at 14% 0.27Present value of 1 for 9 periods at 14% 0.31Present value of 1 for 8 periods at 14% 0.35 East Company has the option to purchase the machine on January 1, 2024, by paying P500,000 which was uncertain. The residual value is guaranteed by a party related to the lessor. On January 1, 2015, the purchase option became certain. On July 1, 2015, East Company leased a delivery truck from…
- P330,000 including executory cost of P30,000, and the machine · for the lease of a machine from another entity. The machine Troy Company prepared the following amortization schedule shall be returned to the lessor at the end of the lease term. The lease agreement required four annual payments of Problem 10-10 (IFRS) had an economic life of six years. Reduction Balance of liability Interest Minimum lease payment expense liability 1 /1/2021 12/31/ 2021 12/31/2022 12/31/ 2023 12/31/ 2024 300,000 300,000 300,000 300,000 98,515 78,366 56,203 31,766 201,485 221,634 243,797 268,234 985,150 783,665 562,031 318,234 50,000 Required: 1. Prepare journal entry to record the finance lease on January 1, 2021. 2. Prepare journal entry on December 31, 2021 to record the annual lease payment and the executory cost. 3. Prepare journal entry to record the depreciation for 2021. 4. Prepare journal entry to record the annual lease.payment and the executory cost on December 31, 2024. 5. Prepare journal entry…Example: A company leased an asset to another company on 1 January 20X1 on the following terms. Lease term 4 years Inception of lease 1.1.X1 Annual instalments in advance Rs. 22,000 Residual value of asset as guaranteed by lessee Rs. 10,000 Expected residual value at end of lease Rs. 12,000 Fair value of the asset Rs. 82,966 Initial direct costs incurred by the lessor Rs. 700 Interest rate implicit in the lease 11% Requirements a) Calculate the unguaranteed residual value and the net investment in the lease as at 1 January 20X1 b) Prepare extracts from the financial statements of the lessor for the year ended 31.12.X1 (excluding notes)Fitbit Ltd has leased a machine on the following terms:Date of entering lease 1 July 2019Duration of lease 5 yearsLife of asset 6 yearsUnguaranteed residual value $40,000Lease payments inception (at the start) $60,000Annual payments (5) $65,000Implied rate 11.0 %Required:Determine the Fair Value (rounded off) of the leased asset. Show your work
- East Company leased a new machine from North Company on January 1, 2021 under a lease with the following information:Annual rental payable at the beginning of each lease year P 400,000Lease term 10 yearsUseful life of the machine 12 yearsImplicit interest rate 14%Incremental borrowing rate of the lessee 12%Initial direct costs 100,000East Company has the option to purchase the machine on January 1, 2031 by paying P500,000 which approximates the expected fair value of the machine on the option exercise date. 1. At the commencement of the lease, what amount should be recognized as finance lease liability? 2. What would be the carrying amount of the leased asset in the records of East Company as of December 31, 2023? 3. The balance of the finance lease liability as of December 31, 2024 is:Fitbit Ltd has leased a machine on the following terms:Date of entering lease 1 July 2019Duration of lease 5 yearsLife of asset 6 yearsUnguaranteed residual value $40,000Lease payments inception (at the start) $60,000Annual payments (5) $65,000Implied rate 11.0 % Required:Determine the Fair Value (rounded off) of the leased asset. (7 marks)Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2024. Edison purchased the equipment from International Machines at a cost of $135.990. Note: Use tables, Excel, or a financial calculator. (EV of $1., PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) 2 years (8 quarterly periods) at the beginning of each period years $ 18,200 2 $ 135,990 Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2025. Amortization is recorded at the end of each fiscal year (December 31) on a straight-line basis. Amortization General Schedule Journal Complete this question by entering your answers in the tabs below. Record the appropriate entries for Manufacturers Southern from the beginning of…