On January 1, Garcia Supply leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. Negotiations led to Garcia guaranteeing a $36,000 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $35,000. What is the amount to be added to the right-of-use asset and lease liability under the residual value guarantee?

On December 31, 2013, Corporation A leased equipment to Company B for a five-year period. The annual lease payment, excluding executory costs is $42,000. The interest rate for this lease is 10%. The payments are due on December 31 of each year. The first payment was made on December 31, 2013. The normal cash price for this type of equipment is $150,000 while the cost to Corporation A was $118,000. For the year ended December 31, 2013, by what amount will Corporation A's pretax earnings increase from this lease?

American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4.1 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be five years with no residual value. Barton and Barton's implicit interest rate was 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 1 Req 2 Prepare the appropriate entries related to the lease…

Teal Mountain Company is negotiating to lease a piece of equipment to MTBA, Inc. MTBA requests that the lease be for 9 years. The equipment has a useful life of 10 years. Teal Mountain wants a guarantee that the residual value of the equipment at the end of the lease is at least $4,000. MTBA agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2,500 at the end of the lease term.If the fair value of the equipment at lease commencement is $60,000, what would be the amount of the annual rental payments Teal Mountain demands of MTBA, assuming each payment will be made at the beginning of each year and Teal Mountain wishes to earn a rate of return on the lease of 6%? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.)

ABC Company leased equipment to Best Corporation under a lease agreement that qualifies as a direct finance lease. The cost of the asset is OMR 22,000. The lease contains a bargain purchase option that is effective at the end of the fifth year. The expected economic life of the asset is five years. The lease term is 5 years. The asset is expected to have a residual value of OMR 2,000 at the end of ten years. Using the straight-line method, what would Best record as annual depreciation?  Select one: a. OMR 2,000 b. OMR 4,500 c. OMR 5,000 d. OMR 4,000

Wilson Foods Corporation leased a commercial food processor on September 30, 2021. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $313,238, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2021. Wilson’s incremental borrowing rate is 12%. Wilson records amortization on a straight-line basis at the end of each fiscal year. Wilson recorded the lease as follows:    September 30, 2021 Right-of-use asset (calculated below) 4,800,000   Lease payable (calculated below)   4,800,000       Lease payable 313,238   Cash (first payment)   313,238   Calculation of the present value of lease payments$313,238 × 15.3238* = $4,800,000 (rounded)*Present value of an annuity due of $1: n = 20, i = 3% Required:What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year ended December 31, 2021?

Gordon Inc., a private company that follows ASPE, entered into a lease agreement with Canada Leasing Corporation to lease a warehouse for six years.  Annual lease payments are $21,000, payable at the beginning of each lease year.  Gordon Inc. signed the lease agreement on January 1, 2021, and made the first payment on that date. At the end of the lease, the machine will revert back to Canada Leasing Corporation.  The normal useful life of the warehouse is 10 years.  At the time of the lease, the warehouse could be purchased for $108,000.  Gordon does not know the implicit rate of the lease; Gordon's incremental borrowing rate is 10%.  Gordon uses straight-line depreciation for this type of asset. Required: Using the three criteria under ASPE, prove whether this is an operating or capital lease. Prepare a lease amortization schedule for the lease.  Round all amounts to the nearest dollar. Prepare the journal entries for 2021 and 2022 for Gordon Inc.  Round amounts to the nearest…

Braun Company acquired a piece of equipment from Tipper Company under a lease agreement. The lease requires six annual lease payments of $35.000 with the first payment due when the lease begins, on January 1, 2020. Future lease payments are due on January 1 of each year of the lease term. The interest rate in the lease is 10%. What amount should Braun Company debit the equipment account on the date of acquisition. Round answer to the nearest dollar). $225,000 $32.678 $167,678 O$152434 Braun Company would not debit the equipment account because the equipment is being cased and not purchased.

Riverbed Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Riverbed’s incremental borrowing rate is 9%. Riverbed is unaware of the rate being used by the lessor. At the end of the lease, Riverbed has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Riverbed uses the straight-line method of depreciation on similar owned equipment. A)Prepare the journal entries, that Riverbed should record on December 31, 2020.

On January 2, 2019, Charminster Corporation leased six computers for use in its engineering department. The lease period is five years and the estimated economic life of the leased property is six years. The lease does not contain automatic title transfer and a bargain purchase option. Annual lease payments are payable in advance every January 2 in the amount of P90,000. The incremental borrowing rate for Charminster Corporation is 12% and the implicit interest rate (known to Charminster) is 10%. The company uses straight-line depreciation for this type of equipment. (Use two decimal places for the PV factors) 1. What is the capitalized cost of the right of use asset? 2. How much is the interest expense recognized in profit of loss for the year 2019?