Carla Vista Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2023, that requires 6 annual payments of $25,500 each, beginning September 1, 2023. In addition, Carla Vista guarantees the lessor a residual value of $14,900 at lease end. The equipment has a useful life of seven years. Assume an interest rate of 12%. (Use tables below, a financial calculator, or Excel functions.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguaranteed residual value. Include in your schedule entries on August 31, 2024, for the year-end accrual of interest in the lease obligation and the recording of annual depreciation expense using the straight-line method and assuming no residual value. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. Round answers to O decimal places, e.g. 5,275.)

Carla Vista Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2023, that requires 6 annual payments of $25,500 each, beginning September 1, 2023. In addition, Carla Vista guarantees the lessor a residual value of $14,900 at lease end. The equipment has a useful life of seven years. Assume an interest rate of 12%. (Use tables below, a financial calculator, or Excel functions.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguaranteed residual value. Include in your schedule entries on August 31, 2024, for the year-end accrual of interest in the lease obligation and the recording of annual depreciation expense using the straight-line method and assuming no residual value. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. Round answers to O decimal places, e.g. 5,275.)

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 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

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On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
Braun Company acquired a piece of equipment from Tipper Company under a lease. The lease requires five annual lease payments of $30,000 with the first payment due when the lease begins, on January 1, 2022. Future lease payments are due on January 1 of each year of the lease term. The interest rate in the lease is 6%. What amount should Braun Company debit the equipment account on the date of acquisition?
Carla Vista Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2023, that requires 6 annual payments of $25,500 each, beginning September 1, 2023. In addition, Carla Vista guarantees the lessor a residual value of $14,900 at lease end. The equipment has a useful life of seven years. Assume an interest rate of 12%. (Use tables below, a financial calculator, or Excel functions.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguaranteed residual value. Include in your schedule entries on August 31, 2024, for the year-end accrual of interest in the lease obligation and the recording of annual depreciation expense using the straight-line method and assuming no residual value. (List all debit entries before credit entries. Credit account titles are automatically…
Cullumber Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2023, that requires 6 annual payments of $38,000 each, beginning September 1, 2023. In addition, Cullumber guarantees the lessor a residual value of $27,000 at lease end. The equipment has a useful life of seven years. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE OF 1. (a) Using (1) tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the capital lease and prepare Cullumber's September 1, 2023 journal entry assuming an interest rate of 12%. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.)…
sunland corporation, which uses ASPE, enters into a 6 year lease of equipment on september 1, 2023, that requires 6 annual payments of $30,000 each, beginning september 1, 2023. In addition, sunland gaurantees the lessor a residual value of $19,000 at lease end. the equipment has a useful life of seven years. Using tables, a financial calculator, or excel functions, calculate the amount of the capital lease and prepare Sunlands september 1, 2023 journal entry assuming an interest rate of 8%.
On January 1, 2021, Flackmon Company entered into a lease for a truck with a payment of S16,000 per year for 4 years. The expected life of the truck is 5 years, and the first payment will be made immediately. Flackmon could obtain a loan for a similar amount at a rate of 8% per year. Required: A. Record the lease liability and the first payment on January 1, 2021. B. Record the amortization on the leased asset for 2021. C. Record interest for 2021 on the lease. D. Record the lease payment on January 1, 2022. Your answers to this open-ended assignment should be placed in the space below this line. A Date Account Name Debit Credit Jan. 1, 2021 1-Jan-21 B Date Account Name Debit Credit Dec. 31, 2021 C Date Account Name Debit Credit Dec. 31, 2021 D Date Account Name Debit Credit Jan. 1, 2022
On December 31, 2023, a day when the available interest rate was 9%, Valcent Products Inc. leased equipment with an six-year life. The contract called for an $7,900 annual lease payment at the end of each of the next five years, with the equipment becoming the property of the lessee at the end of that period. Use TABLE 14A.2. (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare entries to record. Valcent Products Inc. uses Accumulated depreciation account to account for depreciation expense. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar) a. the leasing of the equipment. b. depreciation expense for 2024 assuming straight-line and a zero residual value, c. the December 31, 2024, lease payment, including the recognition of Interest expense on the lease liability on December 31, 2024.
On 1 July 2020, the company had entered into a five-year lease agreement for an asset with RF S.A.O.G. The company must make lease payments of OMR 100,000 annually at the beginning of each year. The present value of the total lease payments is RO 379,000. The estimated useful life of the asset is 5 years. The cost of capital used is 10%. Calculate the amount that will be charged in the income statement with regards to such asset for the year ended 31st December 2020. Oa OMR 100,000. Ob.OMR 51,850. O C OMR 75,800. Od. OMR 50,000.
On 1 July 2020, the company had entered into a five-year lease agreement for an asset with RF S.A.O.G. The company must make lease payments of OMR 100,000 annually at the beginning of each year. The present value of the total lease payments is RO 379,000. The estimated useful life of the asset is 5 years. The cost of capital used is 10%. Calculate the amount that will be charged in the income statement with regards to such asset for the year ended 31st December 2020. O a. OMR 100,000. O b. OMR 51,850. OC. OMR 75,800. O d. OMR 50,000.
Honesty Company acquired a machine by signing a five-year lease on January 1, 2021. Annual rentals of P1,000,000 are payable at the beginning of each lease year starting January 1, 2021. The machine is expected to have a guaranteed residual value of P100,000 at the end of the lease term. The machine’s useful life is 6 years, at the end of which the machine’s residual value is expected to be P300,000. Integrity uses straight-line method to depreciate this asset. The lessor’s implicit interest rate is 10%, which is known to Honesty. The company appropriately recorded the machine and the related liability on January 1, 2021. The company follows the calendar year as its accounting period. (Round off the PV factor to four decimal places, then do not round off during the computation)How much is the depreciation expense to be recognized in 2021?
On January 1, 2020, Narra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000. Assume it is a direct finance lease with an implicit rate of 12% and the residual value is guaranteed, how much is the interest income for 2020? Assume it is a direct finance lease with an implicit rate of 12% and the residual value is unguaranteed, how much is the net lease receivable as of yearend 2022? Assume it is a sales-type lease with an implicit rate of 10% and the residual value is guaranteed, how much should be credited to sales resulting from the lease? Assume it is a sales-type lease with an implicit rate of 10% and the residual value is guaranteed, how much is cost of sales resulting from the lease? Assume it is a sales-type lease with an…
On June 30, 2024, Clark, Incorporated leased warehouse equipment from Woodward, Incorporated. The lease agreement calls for Clark to make semiannual lease payments of $700,000 over a 2-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment on June 30, 2024. Clark's incremental borrowing rate is 10%, the same rate Woodward used to calculate lease payment amounts. Woodward manufactured the equipment at a cost of $2,220,000. Lease date Semi-annual payments Lease term Payments per year Equipment's cost Clark's incremental borrowing rate 1. Determine the price at which Woodward is 'selling' the equipment (present value of the lease payments) using Excel's PV function. 2. Prepare the journal entry to record the sale by Woodward Incorporated on June 30, 2024. Date General Journal Debit June 30, 2024 3. Prepare an amortization schedule for the 2-year term of the lease. Date June 30, 2024 December 31, 2024 June 30, 2025 December 31, 2025…