None Question:User Company leased computer equipment from Owner Company on January 1, 20X1. The computer equipment has an expecteduseful life of 15 years with no expected salvage value. The terms of the lease require annual payments of $10,000 at the end ofeach year for 15 years with the first payment being made on December 31, 20X1. The interest rate used in computing the leasepayments is 12% compounded annually. User Company is accounting for this lease as an OPERATING lease. What is the reportedamount of the operating lease RIGHT-OF-USE ASSET in the balance sheet on December 31, 20X1 (the end of the FIRST year)?Note: Round your calculations to the nearest dollar. $58,109 $63,568 $66,282 $68,109

Step 1:- Present Value of Lease Payments:We need to calculate the present value of all the lease…

Answered: Question: User Company leased computer…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 27E

See similar textbooks

Similar questions

Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?
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.
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).
Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.
Company A leases equipment from Company B in a finance lease. Lease payments of $3,226 are due quarterly over a 10 year period, with the first payment due July 1, the beginning of the lease. The annual interest rate is 8%. What is the outstanding balance in the Lease Payable account after the second payment? What is the outstanding balance in the Right-of-Use asset account after the second payment?
Novak Limited has entered into an agreement to lease manufacturing equipment. The following terms are included in the lease: Lease terms 5 years Payments required monthly on the last day of the month Leasing interest rate Estimated useful life of equipment PV of lease payments $3,114 8%/annum 5 years $153,600 The lease is entered into on January 1, 2024. The equipment can be purchased for $160,000. The company uses straight-line depreciation. (a) Prepare the journal entry for 2024 to recognize the lease. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entry before credit entry.) Date January 1, 2024 Account Titles Debit Credit
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2011. Edison purchased the equipment from International Machines at a cost of $112,080. Related Information: 2 years (8 quarterly periods) $15,000 at the beginning of each period 2 years $112,080 8% Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the inception of the lease through January 1, 2012. Edison's financial year ends December 31.
On December 31, 2018, Zonrox Company leased a new machine from Oxide Corporation. The following data relate to the lease transaction at the inception of the lease: 10 years P240,000 12 years Lease term Annual rental payable at the end of each term Estimated life of machine Implicit interest rate Present value of an annuity of P1 for 10 periods at 10% Present value of 1 at 10% for 10 periods 10% 6.145 Unguaranteed residual value Payment to lessor to obtain a long-term lease Annual maintenance cost 0.386 150,000 30,000 35,000 The lease provides for neither a transfer of title to the lessee nor a purchase option. Compute the lease liability on December 31, 2019.
On January 1, 2020, Naruto Company leased a new machine from Sasuke Company. The following data relate to the lease transaction at the inception of the lease: Lease term 5 years Annual rental payable at beginning of each lease year 500,000 Useful life of machine 10 years Implicit interest rate 10% Present value of an annuity of 1 in advance for 5 periods at 10% 4.17 Present value of annuity of 1 in arrears for 5 periods at 10% 3.79 Fair value of the machine 2,500,000 The lease has no renewal option and the possession of the machine reverts to Sasuke when the lease terminates. At the inception of the lease, Naruto should record a lease liability of
Terms of a lease agreement and related facts were: a. Leased asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor’s implicit rate when calculating annual rental payments was 10%. d. Costs of negotiating and consummating the completed lease transaction incurred by the lessor were $2,062. e. Collectibility of the lease payments by the lessor was reasonably predictable and there were no costs to the lessor that were yet to be incurred. Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its inception, and at the December 31 fiscal year-end under each of the following three independent assumptions: 1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $100,000 to…
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2011. Edison purchased the equipment from International Machines at a cost of $112,080. Related Information: 2 years (8 quarterly periods) $15,000 at the beginning of each period 2 years $112,080 Lease term Quarterly rental payments Economic life of asset Fair value of asset 8% Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the inception off the lease through January 1, 2012. Depreciation is recorded at the end of each financial year (December 31) on a straight-line basis.
On December 31, 2020, Naruto Company leased a new machine from Sasuke with the following pertinent information: Lease term 6 years Annual rental payable in beginning of each year 500,000 Useful life of machine 8 years Implicit interest rate in lease 12% Present value of an annuity of 1 in advance for 6 periods at 12% 4.60 Present value of an ordinary annuity of 1 for 6 periods at 12% 4.11 The lease is not renewable, and the machine reverts to Sasuke at the termination of the lease. The cost of the machine on Sasuke’s accounting records is P3,755,000. At the beginning of the lease term, Naruto should record a lease liability of

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

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

Publisher:

Cengage Learning

Financial Accounting: The Impact on Decision Make…

Accounting

ISBN:

9781305654174

Author:

Gary A. Porter, Curtis L. Norton

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

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

Publisher:

Cengage Learning

Financial Accounting: The Impact on Decision Make…

Accounting

ISBN:

9781305654174

Author:

Gary A. Porter, Curtis L. Norton

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS