The Lessor Company leases equipment to the Lessee Company on January 1, 2020. The lease is appropriately recorded as a purchase for accounting purposes for Lessee and as a sale for accounting purposes for Lessor. The lease is for a ten-year period. Equal annual payments under the lease are $30,000 and are due on January 1 of each year. The first payment is made on January 1, 2022. The cost of the equipment on Lessor's accounting records is $100,000. The equipment has an estimated useful life of ten years with no residual value expected. The of interest contemplated by Lessor and Lessee is 9 percent. Assume that the present value of the lease payments equals the market value of the equipment (selling price). Assume this is a sales- type lease. A.Prepare the entry or entries required for Lessor on January 1, 2022. A.Prepare the entry or entries required for Lessor on December 31, 2022. A.Prepare the entry or entries required for Lessor on January 1, 2023.
Q: Company išsued 10,000U shares of alue of $5 and a fair value of $25 per share of preferred stock wit...
A: Stockholders are the Persons of entities whom the company issues its ownership rights in the form of...
Q: If P250,000 is invested for two years, what is the maturity value (disregard withholding tax for #s ...
A: Future Value = Present Value x (1 + r)^n
Q: Easy Company provided the following statement of financial position at year-end and income statement...
A: Operating segments refer to component of the firm. These segments have discrete revenues and expense...
Q: how may resources in the general fund can be assigned to a specific purpose (if that is the intent o...
A: The gap between assets as well as liabilities throughout the government expenditures balance sheet i...
Q: ted. Does the expected loss meet the definitio
A: Conceptual Framework A conceptual framework is a written or visual representation of how variables s...
Q: On June 1, 2022, EBD sold equipment to EHL in exchange for a zero-interest bearing note with a face ...
A:
Q: What mechanisms operate the chain of building relationship equity?
A: The B2C mechanism is the credible chain for building the relationships equity because it is manageab...
Q: Which of the following statements is true?a. The outstanding number of shares is the maximum number ...
A: Shares outstanding allude to a corporation's stock that is currently occupied by all of its stockhol...
Q: I. DIRECT COST AND OVERHEAD COST VARIANCE ANALYSIS Goldilock Inc. produces safe deposit boxes. Durin...
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for you...
Q: Lopez acquired a building on June 1, 2016, for $1,000,000. Compute the depreciation deduction assumi...
A: Solution Depreciation means to reduction the cost of an asset over its useful life. Depreciation are...
Q: An explanation of the overall operations of a fulfilment centre?
A: A fulfilment center is a third-party service provider who processes and sends items ordered by your ...
Q: The following data were included in a recent Mango, Inc. annual report ($ in millions): In milli...
A: The fixed assets turnover ratio is calculated as net sales divided by average fixed assets. Fixed as...
Q: Sanjay Company has monthly fixed costs of $112,000. The variable costs are $5.00 per unit. The sales...
A: Formula: Sales revenue = Sales price per unit x Number of units sold
Q: Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2020, by issuing 1...
A: A business combination is a transaction in which a buyer takes over control of another company (the ...
Q: Crandall Distributors uses a perpetual inventory system and has the following data available for inv...
A: Solution Calculation of goods available for sale- = (110*7.1)+(575*7.2)+(680*7.5)+(230*7.7). = 117...
Q: Ridley Corporation is a manufacturing company in the Caribbean. The company sponsors a defined benef...
A: Disclaimer: “Since you have posted a question with multiple sub-parts, we will solve first three sub...
Q: The accountant for Murphy Company prepared the following analysis of its inventory at year end: ...
A: Solution Ending inventory is the amount of the inventory which is not sold during a financial year a...
Q: Babak Industries is a division of a major corporation. Last year the division had total sales of $20...
A: Lets understand the basics. Division's turnover ratio indicates that, how much sales is generated fr...
Q: Time series analysis involves comparing a company’s income statement and balance sheet forthe curren...
A: Time series compares the financial statement of current year company to its previous year Cost of go...
Q: ABC Corporation has an investment of 4,000,000 shares in XYZ Corporation. On December 31, 2021, ABC ...
A: Dividend in form of shares given to stockholders is called as Stock Dividend Stock Dividend is usual...
Q: January 3 Purchased equipment for $55000, paying $45000 in cash and signing a 10000, 4-month, 10% no...
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in...
Q: On January 1,2020, ABC Company acquired 80 percent of DEF Company's Common Stock for P400,000 cash. ...
A: As per Bartleby policy, only the first three interlinked parts are answered. If you want any specifi...
Q: A man bought a machine for P638855 six years ago. It has a salvage value of P46012 four years from n...
A: In the given question, machine was purchased 6 years ago and it still has a life of 4 years after wh...
Q: Fish Galore Corp. bought 25% of Fin Chaser Corporation's stock for $70,000 on January 1, 2020. Durin...
A: Journal entries for investment are based on the percentage of the acquisition.
Q: urin Ltd has been asked to give a quote for making a large piece of earth-moving equipment. The ord...
A: A relevant cost is a cost that only relates to a specific management decision, and which will change...
Q: QUESTION: if Chiz is non-VAT registered, how much is the business tax payable?
A: Non Vat Register For the Non Vat register whose gross sales / gross receipts which are not crossed o...
Q: Walmart Inc. is an American multinational retail corporation that operates a chain of hypermarkets, ...
A: Note: As per the norms of Bartleby, in case of questions with multiple sub parts, the first 3 subpar...
Q: How do you differ a public corporation from a private corporation? give examples-names, purpose or o...
A: Corporation- A corporation is a legal entity with the identity of a legal person that was formed by ...
Q: Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Fram...
A: The complete amount of money spent on a product is its total cost. Because overhead expenditures mus...
Q: Accounting Budget Fixed FOH=800 Actual HRS=120 Stand HRS=150 Norm HRS= 100 Actual Fixed FOH=815 1.Fi...
A: 1) Fixed Overhead Rate is derived by dividing the total cost pool by unit of basis of allocation us...
Q: Suppose a corporation has the following shares outstanding: 1. $800,000 in 6% Preferred Stock ($100 ...
A: Dividend is the amount of return paid to shareholders for investing their money. Cumulative preferr...
Q: On January 1, 2021, PCO purchased 70% ownership of SCO which resulted to a gain on acquisition of P1...
A: Cost of goods sold=Beginning inventory+Net Purchases-Ending inventory
Q: Expert Q&A Done Problem 4-25 Complete cash budget [LO4-2] Harry's Carryout Stores has eight location...
A: A cash budget is an estimate of a corporation's cash flows for a given time span. A cash budget is u...
Q: Service firms trace only direct-labour costs to jobs. All other costs are applied as a percentage of...
A: Service firms trace only direct-labor costs to jobs. All other costs are applied as a percentage of ...
Q: Common Shares ($5 par value, 2,000,000 authorized, 402,000 issued, and 400,000 outstanding) $2,010,0...
A: Common stock is the representation of ownership. It shows the investment of owners. They are entitle...
Q: Rick and Cindy Davis are married and file a joint return. They live at 3223 Taccone Ave., Apt. 37, M...
A: Form 1040 and schedule 1 are filled by downloading excel Federal tax spreadsheet for 2020. Along wit...
Q: a. Using the least squares method, develop the equation for predicting weekly receiving report costs...
A: Variable cost: Variable cost is one of the component of total cost that variates with the change in ...
Q: 8. In any transaction, the total peso amounts of debits must equal the total peso amounts of credits...
A: 8. In the Double Entry System, in any transaction total of debits always equals to total of credits....
Q: The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of ...
A: Journal is the book of original entry in which all the transactions relating to business are recorde...
Q: 19.Design cycle time is an example of a(n): Financial performance measure Service-after-sale process...
A: When there are no interruptions, the DESIGNED CYCLE TIME is the calculated time it takes for a works...
Q: In January 2014, ABC Corporation, a new corporation, issued 10,000 shares of common stock with a par...
A: some times companies repurchase its own shares to prevent the dilution of the ownership of the compa...
Q: On 30 June 2020, James Ltd acquired a machine for $200 500 cash, with an expected useful life of ten...
A: Fair Value Valuation of Non Current Assets While adopting the fair value valuation it can't measure ...
Q: What amount will be paid at the beginning of every month for 10 years if the present value is 200, 0...
A: Payment at the beginning of every month = PV x r / [{1 - (1 + r)^(-n)} x (1 + r)] Here, PV = Present...
Q: Purchased office equipment for cash Php65,000. a. Debit Office Equipment, Credit Cash b. Debit Off...
A: The golden rule of accounting says that, if assets come in then it should be debited, and if assets ...
Q: Steinberg Company produces commercial printers. One is the regular model, a basic model that is desi...
A: Break even point is the point where the sales amount is equals to the cost of the product. In short,...
Q: Which of the following features of an asset closely links its definition to the scien Economics? A. ...
A: Asset refers to any resource which is owned or controlled through the business and it is anything th...
Q: A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted o...
A: Sale Sale refers to the transaction between seller and buyer where the buyer agrees to pay for the t...
Q: Use the following information to calculate total ending cash and equivalents: Beginning Cash and Equ...
A: Ending cash & cash equivalent will be equal to sum of beginning cash & cash equivalent and c...
Q: amounted to P126,700. The foods and drinks b nightclub are being served by Tiberio, a non-VA uring t...
A: Amusement tax refers to the form of tax levied on any source of commercial entertainment services pr...
Q: 16. Revenue cannot be recognized unless delivery of goods has occurred or services have been rendere...
A: Since you have posted multiple questions we will do the first one for you. To get the other questio...
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of 20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is 68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Executory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020.Lessee Accounting Issues Timmer Company signs a lease agreement dated January 1, 2019, that provides for it to lease equipment from Landau Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: The lease is noncancelable and has a term of 5 years. The annual rentals are 83,222.92, payable at the end of each year, and provide Landau with a 12% annual rate of return on its net investment. Timmer agrees to pay all executory costs directly to a third party on December 1 of each year. In 2019, these were insurance, 3,760; property taxes, 5,440. In 2020: insurance, 3,100; property taxes, 5,330. There is no renewal or bargain purchase option. Timmer estimates that the equipment has a fair value of 300,000, an economic life of 5 years, and a zero residual value. Timmers incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment. Required: 1. Calculate the amount of the asset and liability of Timmer at the inception of the lease. (Round to the nearest dollar.) 2. Prepare a table summarizing the lease payments and interest expense. 3. Prepare journal entries on the books of Timmer for 2019 and 2020. 4. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the present value of next years payment approach to classify the finance lease obligation between current and noncurrent. 5. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the change in present value approach to classify the finance lease obligation between current and noncurrent.Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.
- Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: The lease is noncancelable and has a term of 8 years. The annual rentals arc 35,000, payable at the beginning of each year. The interest rate implicit in the lease is 14%. Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for 1 at the end of the lease term, December 31, 2026. The cost of the equipment to the lessee is 150,000, and the fair value is approximately 185,100. Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Ballieu estimates that the fair value is expected to be significantly greater than 1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of 35,000 discounted at 14% is 185,090.68 (the 1 purchase option is ignored as immaterial). Required: 1. Next Level Identify the classification of the lease transaction from Ballices point of view. Give the reasons for your classification. 2. Prepare all the journal entries tor Ballieu for the years 2019 and 2020. 3. Discuss the disclosure requirements for the lease transaction in Ballices notes to the financial statements.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.Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on the following terms: 1. Twenty-four lease rentals of 2,950 at the beginning of each month are to be paid by Terrell, and the lease is noncancelable. 2. The cost of the heavy equipment to Ramsey was 55,000. 3. Ramsey uses an implicit interest rate of 18% per year and will account for this lease as a sales-type lease. Required: Prepare journal entries for Ramsey (the lessor) to record the lease contract on March 1, 2019, the receipt of the first two lease rentals, and any interest income for March and April 2019. (Round your answers to the nearest dollar.)
- Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for Sax. 2. The computers have an estimated life of 5 years, a fair value of 300,000, and a zero estimated residual value. 3. Sax agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. The annual payment is set by Appleton at 83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate. Saxs incremental borrowing rate is 10%. 6. Sax uses the straight-line method to record depreciation on similar equipment. Required: 1. Next Level Examine and evaluate each capitalization criteria and determine what type of lease this is for Sax. 2. Calculate the amount of the asset and liability of Sax at the inception of the lease (round to the nearest dollar). 3. Prepare a table summarizing the lease payments and interest expense. 4. Prepare journal entries for Sax for the years 2019 and 2020.Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease on January 1, 2019, for nonspecialized equipment that cost the Landlord 280,000 (useful life is 6 years with no residual value). The fair value of the equipment is 300,000. The interest rate implicit in the lease is 14%. The 6-year lease requires 6 equal annual amounts payable each January 1, beginning with January 1, 2019. Tenant pays all executory costs directly to a third party on December 1 of each year. The equipment reverts to the lessor at the termination of the lease. Assume that there are no initial direct costs. Landlord expects to collect all rental payments. Required: 1. Next Level (a) Show how landlord should compute the annual rental amounts, (b) Discuss how the Tenant Company should compute the present value of the lease payments. What additional information would be required to make this computation? 2. Next Level Prepare a table summarizing the lease and interest receipts that would be suitable for Landlord. Under what conditions would this table be suitable for Tenant? 3. Assuming that the table prepared in Requirement 2 is suitable for both the lessee and the lessor, prepare the journal entries for both firms for the years 2019 and 2020. Use the straight-line depreciation method for the leased equipment. The executory costs paid by the lessee are in 2019: insurance, 700 and property taxes, 800; in 2020: insurance, 600 and property taxes, 750. 4. Next Level Show the items and amounts that would be reported on the comparative 2019 and 2020 income statements and ending balance sheets for both the lessor and the lessee, using the change in present value approach.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. Assume that Garvey is required to make payments on December 31 each year.
- 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.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).Lessee and Lessor Accounting Issues Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, cost Diego 25,000, and will have no residual value when the lease term ends. The fair value of the equipment is 30,000. La Jolla agrees to pay all executory costs (500 per year) throughout the lease period directly to a third party. On January 1, 2019, the equipment is delivered. Diego expects a 14% return on its net investment. The five equal annual rents are payable in advance starting January 1, 2019. Required: 1. Assuming this is a sales-type lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interest payments suitable for use by either party. 2. Next Level On the assumption that both companies adjust and close books each December 31, prepare journal entries relating to the lease for both companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight line method