Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 15, Problem 15.10BE
Short-term lease
• LO15–5
King Cones leased ice cream-making equipment from Ace Leasing. Ace earns interest under such arrangements at a 6% annual rate. The lease term is eight months with monthly payments of $10,000 due at the end of each month. King Cones elected the short-term lease option. What is the effect of the lease on King Cones’ earnings during the eight-month term (ignore taxes)?
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25
Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024.
The manufacturing cost of the computers was $19 million.
This noncancelable lease had the following terms:
• Lease payments: $3,287,947 semiannually; first payment on January 1, 2024; remaining payments on June 30 and
December 31 each year through June 30, 2028.
• Lease term: 5 years (10 semiannual payments).
• No residual value; no purchase option.
• Economic life of equipment: 5 years.
Implicit interest rate and lessee's incremental borrowing rate: 9% semiannually.
• Fair value of the computers on January 1, 2024: $23 million.
.
What is the outstanding balance of the lease liability in Lone Star's balance sheet on June 30, 2024?
Note: Round your answer to the nearest whole dollar.
Multiple Choice
$17,698,200
Brief Exercise 15-3 (Algo) Lessee and lessor; calculate interest; finance/sales-type lease [LO15-2]
A finance lease agreement calls for quarterly lease payments of $5,302 over a 15-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 $188,000.
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
Problem 5. Operating Lease- Lessor
On
January
1,
2 0x1,
Lessor
entered
into
operating
lease.
an
Information followS:
Annual Rent payable at the end of each year
P100,000
Lease bonus paid by lessee to
lessor
20,000
Security deposit paid by the lessee to the lessor
15,000
Lease term
5 years
Additional Information:
Annual
rent
рayment
includes
P5,000
to
Cover
for
costs
of
administrative tasks
is to be paid for any excess of sales of
Lessee over P1,000,000. Lessee's sales for 20x1 are P1, 100, 000.
Additional rent of 10%
The security deposit will be returned to Lessee at the end of
lease term. The appropriate discount rate is 12%
Annual depreciation on the leased asset is P70,000
Other costs related to the earning of lease income are P5,000
Requirements: Compute for the profit earned on the lease transaction
in 20x1.
Chapter 15 Solutions
Intermediate Accounting, 10 Ed
Ch. 15 - Prob. 15.2QCh. 15 - Prob. 15.3QCh. 15 - Prob. 15.4QCh. 15 - A lessee should classify a lease transaction as a...Ch. 15 - Lukawitz Industries leased non-specialized...Ch. 15 - In accounting for a finance lease/sales-type...Ch. 15 - What is selling profit on a sales-type lease? How...Ch. 15 - At the beginning of an operating lease, the lessee...Ch. 15 - At the beginning of an operating lease, the lessor...Ch. 15 - In accounting for an operating lease, how are the...
Ch. 15 - Briefly describe the conceptual basis for asset...Ch. 15 - In a financing lease, front loading of lease...Ch. 15 - The discount rate influences virtually every...Ch. 15 - A lease that has a lease term (including any...Ch. 15 - A lease might specify that lease payments may be...Ch. 15 - What is a purchase option? How does it affect...Ch. 15 - A six-year lease can be renewed for two additional...Ch. 15 - Culinary Creations leased kitchen equipment under...Ch. 15 - What situations cause us to remeasure a lease...Ch. 15 - Prob. 15.21QCh. 15 - Compare the way a purchase option that is...Ch. 15 - What nonlease costs might be included as part of...Ch. 15 - The lessors initial direct costs often are...Ch. 15 - When are initial direct costs recognized in an...Ch. 15 - Prob. 15.26QCh. 15 - Prob. 15.27QCh. 15 - Prob. 15.28QCh. 15 - When a company sells an asset and simultaneously...Ch. 15 - Prob. 15.30QCh. 15 - Lease classification LO151 (Note: Brief Exercises...Ch. 15 - Lease classification LO151, LO152 Corinth Co....Ch. 15 - Lessee and lessor; calculate interest;...Ch. 15 - Finance lease; lessee; balance sheet effects ...Ch. 15 - Finance lease; lessee; income statement effects ...Ch. 15 - Sales-type lease; lessor; income statement effects...Ch. 15 - Prob. 15.7BECh. 15 - Operating lease LO154 (Note: Brief Exercises 8...Ch. 15 - Operating lease LO154 At the beginning of its...Ch. 15 - Short-term lease LO155 King Cones leased ice...Ch. 15 - Uncertain lease term LO156 Java Hut leased a...Ch. 15 - Uncertain lease payments LO156 On January 1,...Ch. 15 - Purchase option; lessor; sales-type lease LO152,...Ch. 15 - Residual value; sales-type lease LO152, LO153,...Ch. 15 - Guarantee d residual value LO156 On January 1,...Ch. 15 - Lessors initial direct costs; sales-type lease ...Ch. 15 - Lease classification LO151 Each of the four...Ch. 15 - Prob. 15.9ECh. 15 - Lessor calculation of annual lease payments;...Ch. 15 - Sales-type lease; lessor; income statement effects...Ch. 15 - Calculation of annual lease payments; residual...Ch. 15 - Lease concepts; finance/sales-type leases;...Ch. 15 - Calculation of annual lease payments; purchase...Ch. 15 - Prob. 15.37ECh. 15 - Prob. 15.38ECh. 15 - Prob. 15.39ECh. 15 - Lessors initial direct costs; operating and...Ch. 15 - Research Case 151 FASB codification; locate and...Ch. 15 - Ethics Case 153 Leasehold improvements LO153...Ch. 15 - Communication Case 155 Wheres the gain? Appendix...Ch. 15 - Prob. 15.6DMPCh. 15 - Prob. 1CCTCCh. 15 - Prob. 2CCTC
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