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- 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.An asset with a market value of P1,000,000 is leased on January 1, 2019. Five annual lease payments are due each December 31 beginning December 31, 2019. The guaranteed residual value on December 31, 2023, the last day of the lease term, is P400,000. The lessor's implicit interest rate is 8%. What is the annual lease payment? A. P200,000 B. P182,456 C. P168,910 D. P120,000An asset with a market value of P1,000,000 is leased on January 1, 2019. Five annual lease payments are due each December 31 beginning December 31, 2019. The guaranteed residual value on December 31, 2023, the last day of the lease term, is P400,000. The lessor’s implicit interest rate is 8%. What is the annual lease payment? A.P200,000 B.P182,456 C.P168,910 D.P120,000
- ok nt ences A finance lease agreement calls for quarterly lease payments of $7,056 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 12%. Both the present value of the lease payments and the cost of the asset to the lessor are $168,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a partial amortization table up to the October 1 payment. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date July 1 July 1 October 1 Lease Payment Effective Interest Decrease in Outstanding balance balance Required B >1. On Jan. 1, 2020, A+ Company entered into an 8 year lease of floor building with useful life of 15 years with the follwing terms: Annual rental for the first 3 years payable at the end of each year 300, 000 Annual rental for the next 5 years payable at the end of each year 400, 000 Implicit interest rate 10% PV of an ordinary annuity of 1 at 10% for three periods 2.49 PV of an ordinary annuity of 1 at 10% for five periods 3.79 PV of at 10% for three periods 0.75 The lease provides for neither a transfer of title to the lessee nor a purchase option. WHAT IS THE INTEREST EXPENSE FOR 2020? 2. Dexter Company is a car dealer. On jan. 1, 2021, the entity entered into a finance lease with a custometer would pay 200, 000 on jan. 1 each year for 5…At the beginning of 2020, Trump Company leased an equipment with the following information: Annual rental payable at the end of each year P450,000; residual value guarantee P50,000; Lease incentive received P20,000; Lease term 4 years; Useful life of the equipment 8 years; implicit interest rate 10%; present value of an ordinary annuity of 1 at 10% for 4 periods 3.17; present value of 1 at 10% for 4 periods 0.68. What is the cost of right of use asset? P1,440,500 P1,460,500 P1,456,500 P1,830,000 An entity computed its pre-tax income in its GAAP compliant books at P2,450,000 while its income per income tax return properly computed at P2,850,000. There has been a temporary difference causing the discrepancy between the two amounts. The tax rate is 30%. How much is the Deferred Tax Liability of the company to be presented in its statement of financial position? P120,000 P855,000 P735,000 P0
- On January 1, 2020, Yuri Company leased a machine with Problem 11-6 (IFRS) the following information: 100,000 Annual rental payable at the end of each year 5 years Lease term Implicit rate in the lease Present value of an ordinary annuity of 1 at 6% for 5 periods 6% 4.2124 On January 1, 2022, Yuri Company and the lessor agreed to amend the original terms of the lease by reducing the annuol lease payment by P20,000 and increasing the implicit rate to 8%. The present value of an ordinary annuity of 1 at 8% for 3 periods is 2.5771. Required: 1. Prepare the table of amortization for 2020 and 2021. 2. Prepare journal entries for 2020. 3. Remeasure the lease liability on January 1, 2022. 4. Prepare the table of amortization for 2022, 2023 and 2024. 5. Prepare the journal entries for 2022.The following items are related to the lease transaction between Tessie Company and Tessor Company: Commencement of the lease January 1, 2020 Annual lease payments payable in arrears every December 31 P400,000 Purchase option reasonably certain to be exercised by Tessie P322,113 Implicit rate to the lease 10% Lease term 5 years Useful life of the asset 10 years Initial Direct Costs incurred by Tessie P100,000 Lease bonus paid by Tessie to Tessor P50,000 The amount of lease liability Tessie is to recognize on January 1, 2020 is closest toDate of commencement of lease - July 1, 2022 Duration of lease - 8 years Implicit rate of interest - 6% Initial up-front payment - P200,000 Lease payments at the end of each year - P100,000
- The following items are related to the lease transaction between Tessie Company and Tessor Company: Commencement of the lease January 1, 2020 Annual lease payments payable in arrears every December 31 P400,000 Purchase option reasonably certain to be exercised by Tessie P322,113 Implicit rate to the lease 10% Lease term 5 years Useful life of the asset 10 years Initial Direct Costs incurred by Tessie P100,000 Lease bonus paid by Tessie to Tessor P50,000 The amount of Right of Use Asset Tessie is to recognize on January 1, 2020 is closest to?A finance lease agreement calls for quarterly lease payments of $7,728 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 12%. Both the present value of the lease payments and the cost of the asset to the lessor are $184,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a partial amortization table up to the October 1 payment. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date Lease Payment Effective Interest Decrease in balance Outstanding balance July 1 July 1 October 1A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $150,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1? Complete this question by entering your answers in the tabs below Required ARequired B What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1? Interest expense (Lessee) Interest revenue (Lessor) K Required A