Brief Exercise 21A-6 Metlock Company leased equipment from Costner Company, beginning on December 31, 2016. The lease term is 6 years and requires equal rental payments of $24,035 at the beginning of each year of the lease, starting on the commencement date (December 31, 2016). The equipment has a fair value at the commencement date of the lease of $120,000, an estimated useful life of 6 years, and no estimated residual value. The appropriate interest rate is 8%. Prepare Metlock’s 2016 and 2017 journal entries, assuming Metlock depreciates similar equipment it owns on a straight-line basis.

PROBLEM 10: LEASE MODIFICATION WITH EXTENSION of lease term Laze Company entered into a lease agreement for a stall space for its products on January 1, 2020. Some of the agreement in the lease contract are as follows: Annual rental payable at end of each year starting December 31, 2020 P350,000 Lease term 6 years Implicit interest rate in the lease 10% Laze Company proposed an amendment on the original lease contract on January 1, 2023, and was approved by the lessor. The amendment is to extend the lease term for another 2 years with the following additional features: Annual rental payable at end of each year starting December 31, 2023 P350,000 Implicit interest rate in the lease 11% REQUIRED:: Prepare table of amortization and journal entries for the entire lease term.

Questions 1-3 On 1/1/2012 ABC, Inc. enters into a 20-year non-cancelable lease for a piece of machinery owned by XYZ, Inc. The lease calls for annual payments of $20,000, payable at the beginning of each year of the lease (i.e. first payment due on 1/1/2012). At the end of the lease, the right to use the machine transfers back to XYZ. ABC, Inc. declined the choice to purchase the machine outright for $800,000, and the economic life of the machine is believed to be 30 years. There is also an option to renew the lease for an additional 10 years at a reduced rate of $19,000. This does not represent a bargain renewal option that ABC, Inc. is reasonably certain to use. ABC, Inc. uses a 5% discount rate to calculate present values, and generally uses straight line depreciation to depreciate machines assuming a 0% salvage value. In addition, ABC, Inc. spends $20,000 to customize the machinery for use in their factory. They believe that this customization has a useful life of 10 years. What…

Company A leases a motor vehicle from Company B.• The lease became effective 1 January 2014 and the lease term is for 4 years.• The annual lease payments are 10 000 per annum, in arrears.• There is no option of renewal (of the lease agreement).• The implicit interest rate is 10%.• The fair value of the motor vehicle at 1 January 2014 is 31,700. Required:For each of the scenarios below, discuss whether or not the above lease agreementconstitutes a finance lease: Scenario 1: The useful life of the motor vehicle is 8 years. At the end of the lease period,ownership of the motor vehicle transfers from Company B to Company A.  Scenario 2: The useful life of the motor vehicle is 4 years. At the end of the lease period,ownership of the motor vehicle remains with Company B.  Scenario 3: If the lease payments per annum is $5,000 and the useful life of the vehicle is8 years.