Company A (sse) has reached a lease agreement with Company (essor) to lease a noe boom lill beginning January 1, Year 1 The lease agreement contains the following information • The lease is for three years requiring annual payments at the beginning of the year of $10,213 (annuity-due basis). The boom lift has a fair value at the beginning of the lease of $40,000; an estimated economic life of five years; and en unquaranteed residual value of $12,500. • Present value of the residual value is $10,798 • There are no renewal options. At the end of the lease the boom lift will be returned to Company B • The lease does not pass any of the finance lease tests. What is the journal entry that Company A should make on January 1, Year 1 to record the lease? Debit Leased Asset for $40,000; Credit Lease Liability for $40,000 Debit Leased Asset for $29,787; Credit Lease Liability for $29,787 Debit Leased Asset for $27,500; Credit Lease Liability for $27,500 Debit Leased Asset for $29,202; Credit Lease Liability for $29,202

Company A (sse) has reached a lease agreement with Company (essor) to lease a noe boom lill beginning January 1, Year 1 The lease agreement contains the following information • The lease is for three years requiring annual payments at the beginning of the year of $10,213 (annuity-due basis). The boom lift has a fair value at the beginning of the lease of $40,000; an estimated economic life of five years; and en unquaranteed residual value of $12,500. • Present value of the residual value is $10,798 • There are no renewal options. At the end of the lease the boom lift will be returned to Company B • The lease does not pass any of the finance lease tests. What is the journal entry that Company A should make on January 1, Year 1 to record the lease? Debit Leased Asset for $40,000; Credit Lease Liability for $40,000 Debit Leased Asset for $29,787; Credit Lease Liability for $29,787 Debit Leased Asset for $27,500; Credit Lease Liability for $27,500 Debit Leased Asset for $29,202; Credit Lease Liability for $29,202

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 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...

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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).
Accounting 1. Illini leases another piece of equipment from Cubs Corporation under a four-year lease agreement on 1/1/20x1. The lease specifies annual payments on each 1/1 and the first payment of $10,000 is made on 1/1/20x1. The lease also specifies a 3% annual increase in the lease payments. The equipment has a fair value of $100,000 on 1/1/20x1. The expected useful life of the equipment is 10 years with no residual value. The equipment will be returned to Cubs at the end of the lease term. The implicit rate is 10%. Calculate Rental Expense at the end of year one and two.
1. Question 1 Illini leases another piece of equipment from Cubs Corporation under a four-year lease agreement on 1/1/20x1. The lease specifies annual payments on each 1/1 and the first payment of $10,000 is made on 1/1/20x1. The lease also specifies a 3% annual increase in the lease payments. The equipment has a fair value of $100,000 on 1/1/20x1. The expected useful life of the equipment is 10 years with no residual value. The equipment will be returned to Cubs at the end of the lease term. The implicit rate is 10%. Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A]. Project 2.2 Part 2 Journal Entries Date Account Name (Debit) Account Name (Credit) Debit Credit 1/1/20X1 ROU assets [A] Lease obligation [B] 1/1/20X1 Lease obligation [C] Cash [D] 12/31/20X1 Rental expense [E]…
On January 1, 20x1, Entity Y leases out a piece of equipment to Entity X. Information on the lease is as follows: Lease term 3 years Annual rent payable at the end of each year 100,000 Interest rate implicit in the lease 10% The lease provides for the transfer of ownership of the equipment to the lessee at the end of the lease term. What total amount of finance income will Entity Y recognize over the lease term?
6 Company A (lessee) has reached a lease agreement with Company B (assor) to kase a new carpet weaving machine beginning January 1, Year 1. The lease agreement contains the following information • The lease is for five years, requiring annual payments of $10,355.67 at the beginning of the year. • The weaving machine has a fair value at the beginning of the lease of $50,000; an estimated economic life of five years; and a guaranteed residual value of $2,500 (Company A expects that the value will be greater). • Present value of the weaving machine is $47,945.18. • There are no renewal options. At the end of the lease, the weaving machine will be returned to Company B. • Company A depreciates similar equipment that it purchases on a straight-line basis. • Company B sels the annual lease rate al 5% and Company A is aware of the rate. • The lease is a finance lease. COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment Date January 1, Year 1 January 1, Year 1 January…
Company A has agreed to lease two snow plows from Company B. The lease has the following information: • The lease is for three years, requiring annual payments at the beginning of the year of $24,978 (annuity-due basis) • The snow plows have a fair value at the beginning of the lease of $80,000; an estimated economic life of five years; and a guaranteed residual value of $8,900 • Present value of the slow plows is $72,088 • There are no renewal options. At the end of the lease, the snow plows will be returned to Company A Which test does the lease pass in order to be classified as a finance lease? Transfer of ownership O Present value Purchase option Lease term
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PROBLEM 3: Lease arrangement with GUARANTEED Residual ValueLazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental ofP600,000 which is to be paid at the end of each year. The lease contract provides that the lessee has guaranteed a P100,000 residualvalue of the leased asset. The implicit interest rate in the lease is 10%. REQUIRED: Prepare table of amortization and journal entriesfor the entire lease term.
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PROBLEM 2: Lease arrangement with PURCHASE OPTION An entity leased a machinery with useful life of 10 years on January 1, 2020 for period of 8 years with fixed annual rental of P800,000 which is to be paid at the end of each year. The lease contract provides that the lessee has the option to purchase the leased asset at the end of the lease term by paying P50,000. The estimated residual value of the leased asset at the end of its useful life is P150,000. The lessee is reasonably certain to exercise the bargain purchase option. The implicit interest rate in the lease is 12% and the incremental borrowing rate is 10%. REQUIRED: Prepare table of amortization and journal entries for the entire lease term. PROBLEM 3: Lease arrangement with GUARANTEED Residual Value Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of P600,000 which is to be paid at the end of each year. The lease contract provides that the lessee…
Question 2: Figy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets the definition of a lease in accordance with IFRS 16. An initial payment of $150,000 was made on 1 January 20X5 followed by three annual payments on 1 January of $110,000 each. The rate implicit in the lease is 10%. Figy Co incurred initial direct costs of X2 to set up the lease. Required: 1. Give your own X2 then calculate the cost of the right-of-use asset as at 1 January 20X5? 2. What is the carrying amount of the lease liability at 31 December 20X6? 3. What amount will be charged to the statement of profit or loss in respect of this asset for the year ended at 31 December 20X6? 4. Prepare necessary accounting entries related to this lease agreement for the year ended at 31 December 20X5.
A six-year operating lease requires annual rent payments of $15,000 for years 1, 2, and 3, and annual rent payments of $10,000 for years 4, 5, and 6. The agreement also requires the lessor to pay a $2,800 annual insurance premium for the leased property. Which of the following amounts should be recognized as the rental revenue in year 1 by the lessor? O $10,000 O $16,800 $13,500 O $15,000