Can Please Help Me: Accounting / Intermediate Accounting 260 minutes only the given time. Wish you could help me.I will give UPVOTE and GOOD FEEDBACK. 19. Winn Co. manufactures equipment that is sold or leased. On Dec 31, 20x6, Winn leased equipment to Bart for a five year period ending Dec 31,2x11, at which date ownership of the leased asset will be transferred to Bart. Equal payment under the lease are P22,000 (including P2,000 paymentfor non-lease components of the contract) and are due on December 31 of each year. The first payment was made on Dec 31, 20x6. Collectability ofthe remaining lease payments is reasonably assured, and Winn has no material cost uncertainties. The normal sales price of the equipment isP77,000 and the cost is P60,000. For the year ended Dec 31, 20x6, what amount of income should Winn realize from the lease transaction?a.17,000b. 22,000c. 23,000d. 33,000

Given information, Normal sales price of the equipment =P77,000 Cost =P60,000 This is a capital…

19. Winn Co. manufactures equipment that is sold or leased. On Dec 31, 20x6, Winn leased equipment to Bart for a five year period ending Dec 31, 2x11, at which date ownership of the leased asset will be transferred to Bart. Equal payment under the lease are P22,000 (including P2,000 paymer for non-lease components of the contract) and are due on December 31 of each year. The first payment was made on Dec 31, 20x6. Collectability of the remaining lease payments is reasonably assured, and Winn has no material cost uncertainties. The normal sales price of the equipment is P77,000 and the cost is P60,000. For the year ended Dec 31, 20x6, what amount of income should Winn realize from the lease transaction? a.17,000 b. 22,000 c. 23,000 d. 33,000

19. Winn Co. manufactures equipment that is sold or leased. On Dec 31, 20x6, Winn leased equipment to Bart for a five year period ending Dec 31, 2x11, at which date ownership of the leased asset will be transferred to Bart. Equal payment under the lease are P22,000 (including P2,000 paymer for non-lease components of the contract) and are due on December 31 of each year. The first payment was made on Dec 31, 20x6. Collectability of the remaining lease payments is reasonably assured, and Winn has no material cost uncertainties. The normal sales price of the equipment is P77,000 and the cost is P60,000. For the year ended Dec 31, 20x6, what amount of income should Winn realize from the lease transaction? a.17,000 b. 22,000 c. 23,000 d. 33,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

See similar textbooks

Similar questions

On 31 December 20X1, Lessee Ltd. entered into a lease agreement by which Lessee leased a jutling machine for six years. Annual lease payments are $20,000, payable at the beginning of each lease year (31 December). At the end of the lease, possession of the machine will revert to the lessor. The normal economic life for this type of machine is 8 to 10 years. At the time of the lease agreement, jutling machines could be purchased for approximately $90,000 cash. Equivalent financing for the machine could have been obtained from Lessee's bank at 14%. Lessee uses straight-line depreciation for its jutling machines. Required: 1. Prepare a lease liability amortization table for the lease. 2. Prepare all journal entries relating to the lease and the leased asset for 20X1, 20X2, and 20X3. 3. How would the amounts relating to the leased asset and lease liability be shown on Lessee's statement of financial position at 31 December 20X4?
On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor) that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years. The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed by subsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term. Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)a. What amount of lease liability will be recorded by Baal on January 1, 2020? (Round off present value factors to four decimal places,…
On January 1, 2021, Shadow Industries (lessor) leased equipment to Bone Co. (lessee) for a 5-year period under non-cancelable agreement, after which the leased asset will revert back to Shadow Industries. The equipment costs Shadow $660,000 and normally sells for $744,388. Equal payments under the lease are $160,000 and are due on December 31 of each year, with the first payment made on January 1, 2021. The equipment has a useful life of 6 years. The equipment’s residual value is $80,000 at the end of the lease term. The rate implicit in the lease used by the Shadow is 8%, Bone’s incremental borrowing rate is 10% and lessee is aware of lessor’s rate. What amount would Bone record for the right-of-use asset at inception of the agreement? A. $689,941. B. $716,838. C. $744,388. D. $800,000
On Jan 1, 20x1, Panda Yummy entered into an agreement to lease packaging equipment from RCT financing. The lease was for 6 years, commencing immediately on January 1, 20x1. Under the agreement, Panda Yummy would make a lease payment of $24,000 at the beginning of each of the 6 years. The equipment was expected to have an economic life of 1O years. Under the agreement, Panda Yummy had the option of purchasing the packaging equipment for $2,000 at the end of the lease term, when the equipment was expected to be worth $8,000. The lessor's rate of return on the leasing arrangement was 7% Panda Yummy had a year-end of Dec 31. Required Prepare an amortization table for Panda Yummy for the lease. Prepare all Journal entries for 20x1 and 20X2 Prepare the journal entries that Panda Yummy would make when exercising the bargain purchase option at the end of the lease term.
Torrey Co. manufactures equipment that is sold or leased. On December 31, 2018, Torrey leased equipment to Dalton for a five-year period ending December 31, 2023, at which date ownership of the leased asset will be transferred to Dalton. Equal payments under the lease are P1,100,000 (including P100,000 executorycosts) and are due on December 31 of each year. The first payment was made on December 31, 2018. Collectibility of the remaining lease payments is probable. The lease receivable before the first payment is P3,850,000, and cost is P3,000,000. For the year ended December 31, 2018, what amount of income should Torrey realize from the lease transaction?
On January 1, 2024, Gravel Incorporated leased construction equipment from Rocky Mountain Leasing. Rocky Mountain Leasing purchased the equipment from Bishop Incorporated at a cost of $2,069,621. Gravel's borrowing rate for similar transactions is 10%. The lease agreement specified four annual payments of $432,000 beginning January 1, 2024, the beginning of the lease, and at each December 31 thereafter through 2026. The useful life of the equipment is estimated to be six years. The present value of those four payments at a discount rate of 10% is $1,506,319. On January 1, 2026 (after two years and three payments), Gravel and Rocky Mountain agreed to extend the lease term by two years. The market rate of interest at that time was 9%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare the appropriate journal entries for Gravel Incorporated on January 1, 2026, to adjust its lease liability for the…
On 1 January 20x2, TwitX Ltd (TXL) entered into a three-year non-cancellable lease agreement to lease a piece of equipment from TipTop Leasing Ltd (TTL). Lease rental of $12,000 per year are to be paid by TXL on 31 December of each of the three years, commencing 31 December 20x2. TXL guaranteed that the leased asset would have a residual value of $3,000 when the leased asset is reverted to the lessor at the end of the lease term on 31 December 20x4. TXL had no knowledge of the implicit rate used in the lease and its incremental borrowing rate was 10% per annum. TLL's rate of return is 8% per annum. The equipment was new on 1 January 20x2, had a fair market value of $35,000. The leased asset was expected to have an estimated useful life of four years and a residual value of $4,000. Required: (part 1) Compute, as required under FRS 116 Leases, the lease liability and right-of-use asset from the perspective of TXL as at 1 January 20x2. Present the amortization table showing the…
Sheridan Co. manufactures equipment that is sold or leased. On December 31, 2021, Sheridan leased equipment to Dalton for a 5-year period ending December 31, 2026, at which date ownership of the leased asset will be transferred to Dalton. Equal payments under the lease are $1065000 (including $93000 executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2021. Collectibility of the remaining lease payments is probable. The lease receivable before the first payment is $3500000, and cost is $2650000. For the year ended December 31, 2021, what amount of income should Sheridan realize from the lease transaction? 850000 1065000 1825000 1360000
On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor)that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years.The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed bysubsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term.Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Unit 4 Exercise Worksheet2Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)a. What amount of lease liability will be recorded by Baal on January 1, 2020? (Round off presentvalue factors to…
On 1 July 20X4 Near Ltd signed a contract to lease a machine from Far Ltd. On the day the lease contract was signed, Far Ltd purchased the machine at fair value. Near Ltd incurred $2,122 to obtain the lease. Far Ltd incurred initial costs of $1,475. The lease agreement included the following provisions. Lease Term Annual payments from Near Ltd to Far Ltd. The initial payment was made on 1 July 20X4 with subsequent payments made on 30 June each year. Amount included in the annual payments to cover the cost of maintenance and repairs that were arranged and paid for by Far Ltd. 6 years $40,000 $3,000 Residual value of the machine at the end of the lease term Amount of the residual value guaranteed by Near Ltd $25,000 $20,000 Amount of the residual value guarantee that is expected to be payable by Near at the end of the lease term $4,000 Interest rate implicit in the lease 4% The expected useful life of the machine with zero residual at the end of the useful life. 8 years At the end of the…
Eubank Company, a lessee, enters into a lease agreement on January 1, 2021, for equipment. The following data are relevant to the lease agreement: - The term of the noncancelable lease is 4 years. Payments of $978,446 are due on January 1 of each year. The first payment is January 2021. - The fair value of the equipment on January 1, 2021 is $3,500,000. The equipment has an economic life of 6 years with nosalvage value. - Eubank uses the straight-line method of depreciation. - Eubank’s implicit rate is 8%. - This will be treated as a finance lease (Lessee Perspective). Instructions: Prepare the journal entries on Eubank’s books (lessee) that relate to the lease agreement for the following dates, you do not need to create an amortization schedule. a. January 1, 2021. b. December 31, 2021.
On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor)that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years.The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed bysubsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term.Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Prepare an amortization table for the lease liability.