Grande Machinery Company purchased, for cash, a $60,000 custom machine on January 1, 2015. The machine has an estimated 5-year life and will be straight-line depreciated with no salvage value. The machine was then leased to Sunshine Engineering Company, an 80%-owned subsidiary, under a 5-year operating lease for $15,000 per year, payable each January.1. Record the 2015 entries for the purchase of the machine and the lease to Sunshine Engineering Company on the books of GrandeMachinery Company.2. Record the 2015 entries for the transaction on the books of Sunshine Engineering Company.3. Provide the elimination entries that would be made on the 2015 consolidated worksheet.

On January 1, 2016, Cook Textiles leased a building with two acres of land from Peck Development. The lease is for 10 years. No purchase option exists and the property will revert to Peck at the end of the lease. The building and land combined have a fair market value on January 1, 2016, of $1,450,000 and the building has an estimated life of 20 years with a residual value of $150,000. The lease calls for Cook to assume all costs of ownership and to make annual payments of $200,000 due at the beginning of each year. On January 1, 2016, the estimated value of the land was $400,000. Cook uses the straight-line method of depreciation and pays 10% interest on borrowed money. Peck’s implicit rate is unknown. Required: 1. Prepare journal entries for Cook Textiles for 2016. Assume the land could be leased without the building for $59,000 each year. 2. Assuming the land had a fair value on January 1, 2016, of $200,000 and could be leased alone for $30,000, prepare journal entries for Cook…

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(Accounting for an Operating Lease) On January 1, 2017, Doug Nelson Co. leased a building to PatrickWise Inc. The relevant information related to the lease is as follows.1. The lease arrangement is for 10 years.2. The leased building cost $4,500,000 and was purchased for cash on January 1, 2017.3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value.4. Lease payments are $275,000 per year and are made at the end of the year.5. Property tax expense of $85,000 and insurance expense of $10,000 on the building were incurred by Nelson in the first year. Payment on these two items was made at the end of the year.6. Both the lessor and the lessee are on a calendar-year basis.Instructions(a) Prepare the journal entries that Nelson Co. should make in 2017.(b) Prepare the journal entries that Wise Inc. should make in 2017.(c) If Nelson paid $30,000 to a real estate broker on January 1, 2017, as a fee for finding the lessee, how much…

On 1 July 2017, Entity A purchased a chemical machine from Entity B on credit.  The purchase price was $4,560,000 and it will be fully settled on 1 August 2017.  A legal and professional fee of $35,500 was paid by a cheque to Entity C in order to ensure the machine can be ready for use on 1 July 2017.  The economic life of the machine is 5 years without any residual value. According to the purchase contract, Entity A is required to remove the plant on 30 June 2022 and Entity A estimated the dismantling costs of the plant will be $55,123 on that day.  Entity A considered that a discount rate of 10.50% is appropriate for the calculation of present value. On 30 June 2022, the actual dismantling costs were only $45,600 and they were paid by a direct bank transfer to Entity D. On 1 July 2022, a recycling company, Entity E, purchased all the machine scraps for $32,500 on credit and agreed to pay in full on 16 July 2022. REQUIRED: According to relevant accounting standards, prepare journal…

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Subject: acounting

On January 1, 2018, Sauder Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Sauder to make annual payments of $200,000 at the beginning of each year for five years beginning on January 1, 2018 with the title passing to Sauder at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Sauder uses the straight-line method of depreciation for all of its fixed assets. The minimum lease payments were determined to have a present value of $833,972 at an effective interest rate of 10%. What type of lease would this be for Sauder?