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Concept explainers
a.
The implicit rate of lease.
Given information:
Lease term is 5 years.
Economic life of equipment is 30 years.
Fair value of the asset is $8,500,000.
Exercise price of option is $5,500,000.
Carrying value of asset is $6,500,000.
Annual lease payments are $983,199 due on Jan/1 each year
b.
The classification of lease for lessor.
Given information:
Lease term is 5 years.
Economic life of equipment is 30 years.
Fair value of the asset is $8,500,000.
Exercise price of option is $5,500,000.
Carrying value of asset is $6,500,000.
Annual lease payments are $983,199 due on Jan/1 each year
c.
To prepare: The
Given information:
Lease term is 5 years.
Economic life of equipment is 30 years.
Fair value of the asset is $8,500,000.
Exercise price of option is $5,500,000.
Carrying value of asset is $6,500,000.
Annual lease payments are $983,199 due on Jan/1 each year
d.
To prepare: The journal entries of sales type lease for lessor up to beginning of second year of lease.
Given information:
Lease term is 5 years.
Economic life of equipment is 30 years.
Fair value of the asset is $8,500,000.
Exercise price of option is $5,500,000.
Carrying value of asset is $6,500,000.
Annual lease payments are $983,199 due on Jan/1 each year
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Chapter 18 Solutions
Intermediate Accounting (2nd Edition)
- Write down as many descriptions describing rock and roll that you can. From these descriptions can you come up with s denition of rock and roll? What performers do you recognize? What performers don’t you recognize? What can you say about musical inuence on these current rock musicians? Try to break these inuences into genres and relate them to the rock musicians. What does Mick Jagger say about country artists? What does pioneering mean? What kind of ensembles warrow_forwardRecently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?arrow_forwardRecently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
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