On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreementcalls for Georgia-Atlantic to make semiannual lease payments of $468,683 over a five-year lease term (also the asset's useful life),payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's Incremental borrowing rate is10%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Incorporated at a cost of$3.8 million.Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)Required:1. What amount related to the lease would IC report in its balance sheet on December 31, 2024 (Ignore taxes)?2. What amount related to the lease would IC report in its income statement for the year ended December 31, 2024 (Ignore taxes)?Note: For all requirements, enter your answers in whole dollars and not in millions. Round the Intermediate calculation and finalanswers to the nearest whole dollar.Pretax amount of net receivable2. Pretax amount of interest revenue

Semi Annual Lease Payments $ 4,68,683Lease Term5 yearsLease Period10Incremental Borrowing Rate Rate…

Answered: On June 30, 2024, Georgia-Atlantic,…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1.
Sunland Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2025. Annual rental payments of $47,000 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 6%; Sunland's incremental borrowing rate is 8%. Sunland is unaware of the rate being used by the lessor. At the end of the lease, Sunland 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. Sunland uses the straight-line method of depreciation on similar owned equipment. Click here to view factor tables. (a) Your answer is partially correct. Prepare the journal entries, that Sunland should record on December 31, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account…
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Asvin
On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King's sales revenue, with a quarterly sales minimum of $520,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous five-year period, Taco King has generated quarterly sales of over $710,000. Fogelman's Interest rate, known by Taco King, was 4%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare the journal entries for Taco King at the beginning of the lease on January 1, 2024. 2. Prepare the journal entries for Taco King on April 1, 2024. First quarter sales were $720,000. Amortization is recorded quarterly. es Complete this question by entering your answers in the tabs below. Required Required 2 Prepare the journal entries for Taco King at the beginning of the lease on January 1,…
On January 1, 2021, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King's sales revenue, with a quarterly sales minimum of $520,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous 5-year period, Taco King has generated quarterly sales of over $710.000. Fogelman's interest rate, known by Taco King, was 4%. ( EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entries for Taco King at the beginning of the lease at January 1, 2021. 2. Prepare the journal entries for Taco King at April 1, 2021. First quarter sales were $720,000. Amortization is recorded quarterly Required 1 Required 2 Prepare the journal entries for Taco King at the beginning of the lease at January 1, 2021. (If no entry is required for a transaction/event, select "No…
On December 31, 2021, Fins signs a four-year truck lease. The truck has a current value of $58,600. Four annual payments of $10,000 will be paid and the first payment will be made on December 31, 2021. After that time, the truck with a previous useful life of 8 years will be returned to the lessor. Fins has an incremental borrowing rate of 6%. The present value of a 4-year annuity payable of $10,000 at an annual rate of 6% is $36,700. The lessor has an implicit annual interest rate of 8% built into the contract. Fins is aware of this implied rate. The present value of a 4-year annuity due for $10,000 at an annual rate of 8% is $35,770. What liability should Fins report on its balance sheet as of December 31, 2021? A) 26,700 B)25,770 C) 10,000 D) 0
On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $468,683 over a five-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's Incremental borrowing rate is 10%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Incorporated at a cost of $3.8 million. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. What amount related to the lease would IC report in its balance sheet on December 31, 2024 (Ignore taxes)? 2. What amount related to the lease would IC report in its income statement for the year ended December 31, 2024 (Ignore taxes)? Note: For all requirements, enter your answers in whole dollars and not in millions. Round the…
Use the following information for the next two items: With Corporation entered into a lease with Argh Leasing, Inc. for a new equipment on January 1, 2020. The lease stipulates that annual payments of P1,000,000 will be made for five years starting December 31, 2020. The present value of the lease payments on January 1, 2020 is P3,791,000, discounted using With's incremental borrowing rate of 10%. The equipment is depreciated on a straight- line basis, and will revert to the lessor at the lease expiration. The company is subject to the regular corporate income tax rate of 30%. Based on the information above, answer the following: 1. What amount should be reported as net deferred tax liability (asset) as at December 31, 2020? 2. What amount should be reported as deferred tax expense (income) for the year ended December 31, 2021?
2. On August 31, 2018, Simmons Inc. leased warehouse equipment from Covington Corp. The lease agreement calls for Simmons to make semiannual lease payments of $50,000 over a 7-year lease term, payable at August 31 and February 28, with the first payment on August 31, 2018. Simmons' incremental borrowing rate is 11%, the same rate Covington used to calculate lease payment amounts. Covington purchased the warehouse equipment at a cost of $700,000 on August 31, 2018 with an expected useful life of 10 years and no salvage value. The fiscal year for both Simmons and Covington ends on December 31. Required: a. What are the present value of the lease payments on August 31, 2018? b. Starting on August 31, 2018 prepare all journal entries related to the lease that Simmons would have to make through December 31, 2020. c. Starting on August 31, 2018 prepare all journal entries related to the lease that Covington would have to make through December 31, 2020. d. What amounts related to the lease…
On 1 January 20X1, Dynamic entered into a three year lease for a lorry. Lease payments are $10,000 per year for the first two years and $15,000 for the third year. All payments are due at the end of the year. The present value of the lease payments was $31,552, and Dynamic incurred initial direct costs of $3,000. Dynamic's rate of borrowing is 5%. Prepare extracts from Dynamic's financial statements in respect of the lease agreement for the year ended 31 December 20X1.
On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia- Atlantic to make semiannual lease payments of $583.573 over a 4-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's Incremental borrowing rate is 11.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $3.4 million. (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. Determine the price at which Builders is "selling" the equipment (present value of the lease payments) at June 30, 2021. 2. What amount related to the lease would Builders report in its balance sheet at December 31, 2021 (Ignore taxes)? 3. What line item amounts related to the lease would Builders report in its Income statement for the year ended December 31,…

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