Blossom Ltd., which uses ASPE, recently expanded its operations into an adjoining municipality, and on March 30, 2023, it signed a 15- year lease with its Municipal Industrial Commission (MIC). The property has a total fair value of $555,000 on March 30, 2023, with one third of the amount attributable to the land and two thirds to the building. The land is expected to double in value over the next 15 years, while the building will depreciate by 60%. The lease includes a purchase option at the end of the lease that allows Blossom to receive title to the property for a payment of $264,300, which is considered a BPO. Blossom is required to make rental payments of $24,000 annually, with the first payment due March 30, 2023. The MIC's implicit interest rate, known to all, is 9%. The building's economic life is estimated at 25 years, at which time it will have a small residual value of $40,000. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. C. Assuming that Blossom's year end is December 31, prepare the entries that are required on December 31, 2023, March 30, 2024, and December 31, 2024. Blossom does not use reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit (To record interest.) (To record depreciation expense.) (To record lease payment.) (To record interest.) (To record depreciation expense.)
Blossom Ltd., which uses ASPE, recently expanded its operations into an adjoining municipality, and on March 30, 2023, it signed a 15- year lease with its Municipal Industrial Commission (MIC). The property has a total fair value of $555,000 on March 30, 2023, with one third of the amount attributable to the land and two thirds to the building. The land is expected to double in value over the next 15 years, while the building will depreciate by 60%. The lease includes a purchase option at the end of the lease that allows Blossom to receive title to the property for a payment of $264,300, which is considered a BPO. Blossom is required to make rental payments of $24,000 annually, with the first payment due March 30, 2023. The MIC's implicit interest rate, known to all, is 9%. The building's economic life is estimated at 25 years, at which time it will have a small residual value of $40,000. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. C. Assuming that Blossom's year end is December 31, prepare the entries that are required on December 31, 2023, March 30, 2024, and December 31, 2024. Blossom does not use reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit (To record interest.) (To record depreciation expense.) (To record lease payment.) (To record interest.) (To record depreciation expense.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Not a graded assignment!!
Transcribed Image Text:Blossom Ltd., which uses ASPE, recently expanded its operations into an adjoining municipality, and on March 30, 2023, it signed a 15-
year lease with its Municipal Industrial Commission (MIC). The property has a total fair value of $555,000 on March 30, 2023, with
one third of the amount attributable to the land and two thirds to the building. The land is expected to double in value over the next 15
years, while the building will depreciate by 60%. The lease includes a purchase option at the end of the lease that allows Blossom to
receive title to the property for a payment of $264,300, which is considered a BPO.
Blossom is required to make rental payments of $24,000 annually, with the first payment due March 30, 2023. The MIC's implicit
interest rate, known to all, is 9%. The building's economic life is estimated at 25 years, at which time it will have a small residual value
of $40,000.
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
C. Assuming that Blossom's year end is December 31, prepare the entries that are
required on December 31, 2023, March 30, 2024, and December 31, 2024. Blossom
does not use reversing entries.
(Credit account titles are automatically indented when the amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter
O for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
(To record interest.)
(To record depreciation expense.)
(To record lease payment.)
(To record interest.)
(To record depreciation expense.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 1 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education