Leases331December 30, 20x5, Entity A leased a new. machine fromCregg Corp. The following data relate to the lease transactionat the inception of the lease:Lease term10 yearsAnnual rental payable at the end of each lease year P100,00012 yearsUseful life of machine10%Implicit interest rateFair value of the machineP700,000The lease has no renewal option, and the possession of themachine reverts to Gregg when the lease terminates. At theinception of the lease, Entity A should record a lease liability ofc. 630,000d. 676,000a. 0b. 615,000(AICPA)5. On January 2, 20x6, Entity A entered into a ten-year non-cancellable lease requiring year-end payments of P100,000.Entity A's incremental borrowing rate is 12% while the lessor'simplicit interest rate, known to Entity A, is 10%. Ownership ofthe property remains with the lessor at expiration of the lease.There is no bargain purchase option. The leased property hasan estimated economic life of 12 years. What amount shouldEntity A capitalize for this leased property on January 2, 20x6?a. 1,000,000b. 614,500(AICPA)c. 565,000d. 06. Entity A'entered into a nine-year finance leaseon .December 31

ANSWER 4 : The lease qualifies as the capital lease because lease term of 10 years exceeds the 75%…

Gregg Corp. The following data relate to the lease transaction On December 30, 20x5, Entity A leased a new. machine from uc Corp. The following data relate to the lease transsaction at the inception of the lease: 10 years Lease term Annual rental payable at the end of each lease year P100 000

Gregg Corp. The following data relate to the lease transaction On December 30, 20x5, Entity A leased a new. machine from uc Corp. The following data relate to the lease transsaction at the inception of the lease: 10 years Lease term Annual rental payable at the end of each lease year P100 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

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 14E: Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease...

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Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.
Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease of equipment entered into on March 1, 2019. The lease is classified as a sales-type lease by the lessor (Anson Company) and as a finance lease by the lessee (Bullard Company). Assume that the lease payments are nude at the beginning of each month, interest and straight-line depreciation are recognized at the end of each month, and the residual value of the leased asset is zero at the end of a 3-year life. Required: 1. Record the lease (including the initial receipt of 2,000) and the receipt of the second and third installments of 2,000 in Ansons accounts. Carry computations to the nearest dollar. 2. Record the lease (including the initial payment of 2,000), the payment of the second and third installments of 2,000, and monthly depreciation in Bullards accounts. The lessee records the lease obligation at net present value. Carry computations to the nearest dollar.
Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee). Required: 1. Assuming that the lease is a sales-type lease, calculate the selling price. 2. Prepare a table summarizing the lease receipts and interest income earned by Edom. 3. Prepare journal entries for Edom tor the years 2019 and 2020.
ompany signs an agreement on January 1, 2020, to lease equipment to Plote Company. The following information relates to this agreement. 1. 2 3. 4. 5. 6. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. The fair value of the asset at January 1, 2020, is $80,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, none of which is guaranteed. The agreement requires equal annual rental payments of $25,563 to the lessor, beginning on January 1, 2020. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. Plote uses the straight-line depreciation method for all equipment. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Required information ABC Corp. manufactured equipment and then leased the equipment to XYZ Corp. on January 1, 2021. Additional details: Annual payments Lease term Useful life of asset Implicit interest rate Present value of lease payments Lease classification $30,000 12 years 16 years 8.0% $244,169 Finance lease The first payment occurs on January 1, 2021, and at each December 31 thereafter. The lease does not transfer ownership at lease-end, and there is no bargain purchase option. (Round final answers to the nearest whole dollar.) Use the information above to answer the questions below. What is the balance of the lease after the first lease payment? Balance of lease after first payment:
After the fourth year, the residual value was estimated at The lease provided for a transfer of title to the lessee at the and four year-end rental payments. The lease qualified as a Module4_Lease.pdf x of the asset was P7,994,000. Terms of the lease specify four-year life for the lease, an annual interest rate of 15% Ericson Company leased an asset to another entity. The coet 12 / 19 100% Problem 13-13 (IAA) direct financing lease.. The lease provided for a transfer of title to the lessee After the fourth year, the residual value was estimated P1,000,000. The PV of 1 at 15% for 4 periods is .572, and the PV of a ordinary annuity of 1 at 15% for 4 periods is 2.855. What is the annual rental payment? a. 2,000,000 b. 3,000,350 c. 2,800,000 d. 2,599,650
On 1 July 2022, Moose Ltd leased a plastic-moulding machine from Wolf Ltd. On 1 July 2022 the machine was in the records of Wolf Ltd at its fair value of $75 000. The lease agreement contained the following provisions. Lease term 4 years Annual rental payment, in advance on 1 July each year $20 750 Residual value at end of the lease term $7 000 Residual guaranteed by lessee $4 000 Interest rate implicit in lease 8% The machine will be depreciated by Moose Ltd on a straight-line basis. The expected useful life of the machine is 5 years. Moose Ltd intends to return the machine to the Wolf Ltd at the end of the lease term. The lease has been classified as a finance lease by Wolf Ltd. Included in the annual rental payment is an amount of $750 to cover the costs of maintenance and insurance paid for by the lessor. Initial direct costs for setting up the lease were incurred by both parties: $1 518 for Moose Ltd and $1 687 for Wolf Ltd. Required: Prepare…
2....continues The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Splish Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $119,127 Residual value of equipment at end of lease term, guaranteed by the lessee $54,000 Expected residual value of equipment at end of lease term $49,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $659,000 Lessor’s implicit rate 6 % Lessee’s incremental borrowing rate 6 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.Click here to view factor tables. Suppose Splish received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be…
Gregg Corp. The following data relate to the lease transaction 1. On December 30, 20x5, Haber Co. leased a new machine from Gregg Corp. at the inception of the lease: 10 years Lease term Annual rental payable at the end of each lease year P100,000 12 years Useful life of machine 10% Implicit interest rate The lease has no renewal option, and the possession of the machine reverts to Gregg when the lease terminates. At the inception of the lease, Haber should record a lease liability of b. 615,000 c. 630,000 d. 676,000 a. 0 (AICPA)
given the information below, what type of lease is this for the lessee? Lease term (years) 6 Remaining economic life (years) 10 Present value of lease payment $176,000 Fair value leased asset $200,000 Residual value (unguaranteed) $14,000 Bargain purchase option No Ownership transfer at end of lease. No a. sales-type lease b. short term lease c. operating lease d. finance lease
2...new...C..continues The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Crane Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $104,218 Residual value of equipment at end of lease term, guaranteed by the lessee $51,000 Expected residual value of equipment at end of lease term $46,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $540,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.Click here to view factor tables. Suppose Crane received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?…
2... The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Splish Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $119,127 Residual value of equipment at end of lease term, guaranteed by the lessee $54,000 Expected residual value of equipment at end of lease term $49,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $659,000 Lessor’s implicit rate 6 % Lessee’s incremental borrowing rate Prepare all of the journal entries for the lessee for and to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the…