At the beginning of 2021, Killion Co. leased furniture to GameStop under a seven-year operating lease agreement. The lease requires quarterly payments of $30,000 each. The furniture was acquired by Killion at a cost of $2.5 million and was expected to have a useful life of 25 years with no residual value. How will GameStop's net income be impacted by this lease? (ignore taxes)? (Enter your answer in whole dollars.).

At the beginning of 2021, Killion Co. leased furniture to GameStop under a seven-year operating lease agreement. The lease requires quarterly payments of $30,000 each. The furniture was acquired by Killion at a cost of $2.5 million and was expected to have a useful life of 25 years with no residual value. How will GameStop's net income be impacted by this lease? (ignore taxes)? (Enter your answer in whole dollars.).

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

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

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On January 2, 2020, Guitar Company leased a warehouse to Violin Corporation under an operating lease for ten years at Php80,000 per year payable on the first day of each lease year. Guitar Company agrees to pay the lessee's relocation/moving cost as an incentive to Violin Corporation for entering into the new lease. The moving cost is Php6,000. What amount of rent income should Guitar Company recognize in its 2020 profit or loss? *
On January 2, 2021, White company leased a machine by signing a 4-year lease contract. Annual rentals of P600,000 are payable every beginning of the year starting January 2, 2021. White did not guarantee the residual value of P100,000 at the end of the lease term. The asset’s useful life is estimated to be 5 years, at the end of which, the asset’s residual value is expected to be P50,000. White uses straight-line method of depreciation. The interest implicit in the lease is 10%. (Round off the PV factor to four decimal places)How much depreciation was recorded by White on the right-of-use asset for the year 2021?
On January 1, 2021, the lessee company signs a 10-year, non-cancelable lease agreement to lease a building from the lessor company. The agreement requires equal rental payments of $115,000 beginning on January 1, 2021. The building has a guaranteed residual value of $17,000, and an expected residual value of $3,000. The lessee's incremental borrowing rate is 10% per year. However, the lessee knows that the lessor’s implicit interest rate is 12%. What is the present value of lease payments? (You must choose from the following present/future values. Please do not use the tables in the textbook, tables posted on the Blackboard, or values from a financial calculator.) Future Value Single Sum Present Value Single Sum Future Value Ordinary Annuity Present Value Ordinary Annuity Present Value Annuity Due 10%, 10 periods 2.59 0.39 15.94 6.14 6.76 12%, 10 periods 3.11 0.32 17.55 5.65 6.33
At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a seven-year operating lease agreement. The contract calls for quarterly rent payments of $25,000 each. The office building was acquired by Lakeside at a cost of $2 million and was expected to have a useful life of 25 years with no residual value. What will be the effect of the lease on LTT’s earnings for the first year (ignore taxes)?
On March 31, 2020, Ahlam Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Ahlam to make annual payments of $10,485 starting April 1, 2021. The machine has an estimated useful life of 6 years. Ahlam uses the straight-line method of depreciation for all of its plant assets. Ahlam’s incremental borrowing rate is 8%. The lessee is aware that the lessor used an implicit rate of 10% in computing the lease payments (present value factor for 5 periods at 8%, 3.993; at 10%, 3.791). Instructions What type of lease is this? Explain. Compute the present value of the minimum lease payments. c. Prepare all necessary journal entries for Ahlam for this lease through December 31, 2021. (Round all amounts to the nearest dollar. Include a partial amortization schedule.)
Happy Company purchased a packing machine intended for leasing at a cost of P330,000. The machine was leased to Great Company on January 1, 2021, at an annual rental of P58,860 payable in advance over a period of 10 years. The lease qualifies as a direct financing lease. There is no expected residual value for the asset. Implicit interest rate is 16%. Happy Company uses the calendar year. What is the amount of interest revenue recognized in profit or loss by Happy Company for the years 2021 and 2022? A. P43,382 and P40,906 B. P52,800 and P51,830 C. P43,832 and P40,609 D. P52,800 and P51,380
25. On January 1, 2019, Rapp company leased a new machine to Lake company. The lease expires on January 1, 2024. The annual rental is 900,000. Additionally on January 1, 2019, Lake company paid 500,000 to Rapp company as a lease bonus and 250,000 as a security deposit to be refunded upon the expiration of the lease. What amount should be reported as rent revenue for the current year?
Suddeth Corporation has entered into a 6 year lease for a building it will use as a warehouse. The annual payment under the lease will be $2,468. The first payment will be at the end of the current year and all subsequent payments will be made at year-ends. If the discount rate is 5%, the present value of the lease payments is closest to (Ignore income taxes.): Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice O O $14,808 $11,050 $14,103 $12,528
At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a seven-yearoperating lease agreement. The contract calls for quarterly rent payments of $25,000 each. The office buildingwas acquired by Lakeside at a cost of $2 million and was expected to have a useful life of 25 years with no residual value. What will be the effect of the lease on Lakeside’s earnings for the first year (ignore taxes)?
The lessor company signs a lease agreement on December 31, 2020 to lease equipment to the lessee company. The term of the non-cancelable lease is 8 years, and yearly rental payment of $87,000 is required at the end of each year, beginning on December 31, 2020. The agreement specifies that the unguaranteed residual value is $42,000. The lessor expects to earn a return of 10% on its investment. The equipment has a useful economic life of 10 years. What is the amount of lease receivable the lessor will record on December 31, 2020? (You must choose from the following present/future values. Please do not use the tables in the textbook, tables posted on the Blackboard, or values from a financial calculator.) Future Value Single Sum Present Value Single Sum Future Value Ordinary Annuity Present Value Ordinary Annuity Present Value Annuity Due 10%, 8 periods 2.14 0.47 11.44 5.33 5.87 10%, 10 periods 2.59 0.39 15.94 6.14 6.76
American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4.8 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be six years with no residual value. Barton and Barton's implicit interest rate was 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1; FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 Year Req 2 Prepare an amortization schedule for the four-year…
At the beginning of its fiscal year, Lakeside Incorporated leased office space to LTT Corporation under a seven-year operating lease agreement. The contract calls for quarterly rent payments of $25,000 each. The office building was acquired by Lakeside at a cost of $2 million and was expected to have a useful life of 25 years with no residual value. What will be the effect of the lease on LTT’s earnings for the first year (ignore taxes)? Note: Enter your answer rounded to the nearest whole dollar.