Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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a) Determine the rate of interest implicit in the lease and calculate the present value ofthe lease payments.
b) Prepare the journal entries in the books of Tea TreeLtd for the years ending 30 June2021 and 30 June 2022.
c) Prepare the portion of the statement of financial position for the year ending 30 June2022 relating to the lease asset and lease liability.
Use the information pertaining to Laura Leasing Company and Plote Company from E21.15. Assume that the expected residual value at the end of the lease is $10,000, such that the payments are $24,638.87.
Instructions
Prepare all of the journal entries for the lessee for 2020 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31.
In E21.15
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Plote Company. The following information relates to this agreement.
1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.
2. The fair value of the asset at January 1, 2020, is $80,000.
3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, none of which is guaranteed.
4. The agreement requires equal annual…
On January 1, 2021, Robertson Construction leased several items of equipment under a two-year operating lease agreement from
Jamison Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent
payments of $47,000 each, payable semiannually on June 30 and December 31 each year. The equipment was acquired by Jamison.
Leasing at a cost of $367,000 and was expected to have a useful life of five years with no residual value. Both firms record.
amortization and depreciation semi-annually.
Required:
Prepare the appropriate journal entries for the lessor (Jamison Leasing) from the beginning of the lease through the end of 2021. (If no
entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Chapter 10 Solutions
Loose Leaf for Financial Accounting: Information for Decisions
Ch. 10 - What is the main difference between notes payable...Ch. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQ
Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 16DQCh. 10 - Prob. 17DQCh. 10 - Prob. 18DQCh. 10 - Prob. 19DQCh. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QSCh. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 16QSCh. 10 - Jin Li, an employee of ETrain.com, leases a car at...Ch. 10 - Prob. 18QSCh. 10 - Prob. 19QSCh. 10 - Prob. 21QSCh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Bringham Company issues bonds with a par value...Ch. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Prob. 10ECh. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 14ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Heineken N.V. reports the following information...Ch. 10 - Prob. 21ECh. 10 - Prob. 2PSACh. 10 - Refer to the bond details in Problem 10-2A,...Ch. 10 - Prob. 7PSACh. 10 - Prob. 8PSACh. 10 - Prob. 9PSACh. 10 - Prob. 10PSACh. 10 - Prob. 11PSACh. 10 - Prob. 12PSACh. 10 - Prob. 2PSBCh. 10 - Prob. 3PSBCh. 10 - Prob. 6PSBCh. 10 - Prob. 7PSBCh. 10 - Prob. 8PSBCh. 10 - Prob. 9PSBCh. 10 - Prob. 10PSBCh. 10 - Prob. 11PSBCh. 10 - Refer to the lease details in Problem 10-11B....Ch. 10 - Prob. 10SPCh. 10 - Prob. 1FSACh. 10 - Prob. 2FSACh. 10 - FSA 10-3 Selected results from Samsung, Apple, and...Ch. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 5BTN
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. Assume that Garvey is required to make payments on December 31 each year.arrow_forwardUse the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.arrow_forwardUse the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).arrow_forward
- On December 31, 2019, Skysong Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Skysong to make annual payments of $8,162 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,100 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Skysong uses the straight-line method of depreciation for all of its plant assets. Skysong's incremental borrowing rate is 9%, and the lessor's implicit rate is unknown. Click here to view factor tables. What type of lease is this? This is a/an lease. eTextbook and Media List of Accounts Compute the present value of the lease payments. (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.) Present value of the lease payments eTextbook and Media List of Accountsarrow_forwardSee attached picture 1. Prepare a 10-year lease amortization schedule 2. Prepare all of the lessor's journal entries for the first yeararrow_forwardA lease agreement that qualifies as a finance lease calls for annual lease payments of $25,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 5%. Required: a. Determine the present value of the lease upon the lease's inception. b. Create a partial amortization table through the second payment on January 1, Year 2. c. If the lessee's fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its income statement for the first year ended December 31 (ignore taxes)? 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) Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C If the lessee's fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its…arrow_forward
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- A lease agreement that qualifies as a finance lease calls for annual lease payments of $50,000 over a four-year lease ferm (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 8%. Required: a. Determine the present value of the lease upon the lease's inception. b. Create a partial amortization table through the second payment on January 1, Year 2. c. If the lessee's fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its Income statement for the first year ended December 31 (ignore taxes)? Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of 51) Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the present value of the lease upon the lease's inception. Note: Round your answers to nearest whole number and round percentage answer to 1…arrow_forwardThe following information relates to an equipment lease with an inception date of January 1: Fair value of equipment at lease inception, $56,000 Lease term, 5 years Economic life of property, 6 years Implicit interest rate, 7% Annual lease payment due on December 31, $13,200 The equipment reverts back to the lessor at the end of the lease term. How much is recorded as the lease liability on the lease inception date? Select one: a. $66,000 b. $56,000 c. $57,911 d. $54,123arrow_forwardSee attached picture Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31 and reversing entries are used when appropriatearrow_forward
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