Carla Vista Corporation owns equipment that cost $94,400 and has a useful life of 8 years with no salvage value. On January 1, 2025, Carla Vista leases the equipment to Sandhill Inc. for one year for one rental payment of $17,700 on January 1. Assuming Sandhill (lessee) elects to use the short-term lease exception, prepare Sandhill's 2025 journal entry. (List debit entry before credit entry. Credit account titles are automatically indented when 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.) Account Titles and Explanation Debit Credit

Carla Vista Corporation owns equipment that cost $94,400 and has a useful life of 8 years with no salvage value. On January 1, 2025, Carla Vista leases the equipment to Sandhill Inc. for one year for one rental payment of $17,700 on January 1. Assuming Sandhill (lessee) elects to use the short-term lease exception, prepare Sandhill's 2025 journal entry. (List debit entry before credit entry. Credit account titles are automatically indented when 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.) Account Titles and Explanation Debit Credit

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

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 14RE: On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment....

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On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.
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.
Brent Corporation owns equipment that cost $80,000 and has a useful life of 8 years with no salvage value. On January 1, 2020, Brent leases the equipment to Havaci Inc. for one year for one rental payment of $15,000 on January 1. Assuming Havaci (lessee) elects to use the short-term lease exception, prepare Havaci's 2020 journal entries.
Peanut Industries leased exercise equipment to Green's Gyms on January 1, 2023. The lease does not meet the criteria for classification as a finance lease or a sales-type lease. The lease agreement specifies four payments of $50,000 beginning on January 1, 2023. The present value of those payments at a discount rate of 6% is $183,651. Which of the following is true regarding the entries made on January 1, 2023? O Peanut Industries records a credit to exercise equipment for $183,651. O Peanut Industries record a debit to cash for $50,000 O Green's Gyms records a debit to lease expense for $183,651 O Green's Gyms record a credit to lease payable of $50,000.
On July 1, 2019, the Manaow Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Del Inc. The following information pertains to the lease agreement. ❖ Annual rental payment is P750,000 beginning July 1, 2019. The rental payment includes P50,000 for taxes and insurance. ❖ The fair value of the building on July 1, 2019 is P4,478,000. ❖ The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. ❖ Implicit rate is 12%. Under IFRS 16, how much is the impact of the lease transaction to the income statement of Manaow Corp. dated December 31, 2019? A. P495,271 B. P470,271 C. P433,357 D. P408,357
On July 1, 2019, the Manaow Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Del Inc. The following information pertains to the lease agreement. Annual rental payment is P750,000 beginning July 1, 2019. The rental payment includes P50,000 for taxes and insurance. The fair value of the building on July 1, 2019 is P4,478,000. The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. Implicit rate is 12%. Under IFRS 16, how much is the impact of the lease transaction to the income statement of Manaow Corp. dated December 31, 2019? A.P495,271 B.P470,271 C.P433,357 D. P408,357
Crane Leasing Company signs an agreement on January 1, 2025, to lease equipment to Cullumber Company. The following information relates to this agreement. 1. 2. 3. 4. 5. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. (a) The cost of the asset to the lessor is $401,000. The fair value of the asset at January 1, 2025, is $401,000. 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 $22,050, none of which is guaranteed. The agreement requires equal annual rental payments, beginning on January 1, 2025. Collectibility of the lease payments by Crane is probable. Click here to view factor tables. Assuming the lessor desires an 6% rate of return on its investment, calculate the amount of the annual rental payment required. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and the final answer to 0…
Oriole Leasing Company signs an agreement on January 1, 2025, to lease equipment to Pharoah Company. The following information relates to this agreement. 1. 2. 3. 4. 5. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $291,000. The fair value of the asset at January 1, 2025, is $291,000. 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 $29,100, none of which is guaranteed. The agreement requires equal annual rental payments, beginning on January 1, 2025. Collectibility of the lease payments by Oriole is probable. Click here to view factor tables. (a) Your answer is correct. Assuming the lessor desires an 8% rate of return on its investment, calculate the amount of the annual rental payment required. (For calculation purposes, use 5 decimal places as displayed in the factor table provided…
On September 1, 2021, DHI Sound System Company leased office furniture and equipment at a monthly rental of ₱40,000 for 3 years expiring August 31, 2024. As an inducement for DHI to enter into lease, the lessor permitted DHI to use the asset rent-free from September 1 to November 30, 2021. For the year ended December 31, 2021, how much TOTAL expense should DHI record related to the leased asset?
(Computation of Rental; Journal Entries for Lessor) Morgan Leasing Company signs an agreement on January 1, 2017, to lease equipment to Cole Company. The following information relates to this agreement.1. The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years.2. The cost of the asset to the lessor is $245,000. The fair value of the asset at January 1, 2017, is $245,000.3. 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 $43,622, none of which is guaranteed.4. Cole Company assumes direct responsibility for all executory costs.5. The agreement requires equal annual rental payments, beginning on January 1, 2017.6. Collectibility of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor.Instructions(Round all numbers to the nearest cent.)(a)…
Sheridan Company leases a building to Skysong, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $ 5,857 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $ 29,000, a book value to Sheridan of $ 22,000, and a useful life of 6 years. 4. At the end of the lease term, Sheridan and Skysong expect there to be an unguaranteed residual value of $ 5,500. 5. Sheridan wants to earn a return of 8% on the lease, and collectibility of the payments is probable. Skysong was unaware of the implicit rate used in the lease by Sheridan and has an incremental borrowing rate of 9%. Click here to view factor tables.How would Sheridan (lessor) and Skysong (lessee) classify this lease? Sheridan would classify the lease as a…
Chance Enterprises leased equipment from Third Bank Leasing on January 1, 2024. Chance elected the short-term lease option. Appropriate adjusting entries are made annually. Related Information: Lease term Monthly lease payments Economic life of asset Interest rate charged by the lessor View transaction list Required: Prepare appropriate entries for Chance from the beginning of the lease through April 1, 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry worksheet < 1 2 3 4 5 1 years (12 monthly periods) on January 1, 2024, through December 1, 2024. years $56,000 5 8% Record the beginning of the lease for Chance. A