Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 5, Problem 5.10P
To determine
Concept Introduction:
Intercompany adjustments of operating lease in consolidation- Operating leases are treated in similar manner as other revenue transactions between the parent and subsidiary and both income and expenses are eliminated.
To prepare: The necessary worksheet for consolidation of given accounts
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Sym Corporation, a wholly owned subsidiary of Paratec Corporation, leased equipment from its parent company on August 1, 2016. The terms of the agreement clearly do not require the lease to be accounted for as a capitallease. Both entities are accounting for the lease as an operating lease. The lease payment is $12,000 per year, paid in advance each August 1.Paratec purchased its investment in Sym on December 31, 2011, when Sym had a retained earnings balance of $150,000. Paratec is accounting for its investment in Sym under the cost method. Included in the original purchase price was a $50,000 premium attributable to Sym’s history of exceptional earnings.The December 31, 2018, trial balances of Paratec and its subsidiary are presented below. Paratec Corporation Sym CorporationCash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000 40,000Accounts Receivable (net) . . . . . . . . . . . . .…
Sheffield Inc. entered into a five-year lease of equipment from matusek Limited on July 1, 2024. The equipment has an estimated
economic life of eight years and fair value of $235,000. The present value of the lease payments amounts to $202,670. The lease does
not have a bargain purchase option and ownership does not transfer to Sheffield at the end of the lease.
(a)
Your answer is correct.
Record the transaction assuming Sheffield follows IFRS. (List debit entry before credit entry. Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for
the amounts.)
Account Titles
IFRS Right-of-Use Asset
Lease Liability
Debit
202670
Credit
202670
Metro Company, a dealer in machinery and equipment, leased equipment to Sands, Inc., on July 1, 2015. The lease is appropriately accounted for as a sales-type lease by Metro and as a capital lease by Sands. The lease is for a 8-year period (the useful life of the asset) expiring June 30, 2023. The first of 8 equal annual payments of $552,000 was made on July 1, 2015. Metro had purchased the equipment for $3,500,000 on January 1, 2015, and established a list selling price of $4,800,000 on the equipment. Assume that the present value at July 1, 2015, of the rent payments over the lease term discounted at 6% (the appropriate interest rate) was $4,000,000.
43. Assuming that Sands, Inc. uses straight-line depreciation, what is the amount of depreciation and interest expense that Sands should record for the year ended December 31, 2015?
a. $400,000 and $206,880
b. $250,000 and $103,440
c. $250,000 and $206,880
d. $240,000 and $103,440
44. What is the amount of profit on the sale and the…
Chapter 5 Solutions
Advanced Accounting
Ch. 5 - Prob. 1UTICh. 5 - Subsidiary Company S has $1000,000 of bonds...Ch. 5 - Plessor Industries acquired 80% of the outstanding...Ch. 5 - Company P purchased $100,000 of subsidiary Company...Ch. 5 - Prob. 5UTICh. 5 - Prob. 6UTICh. 5 - Prob. 7UTICh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Prob. 3.1E
Ch. 5 - Prob. 3.2ECh. 5 - Prob. 4ECh. 5 - Carlton Company is an 80%- owned subsidiary of...Ch. 5 - Carlton Company is an 80%- owned subsidiary of...Ch. 5 - Prob. 6.1ECh. 5 - Prob. 6.2ECh. 5 - Prob. 7.1ECh. 5 - Prob. 7.2ECh. 5 - Prob. 7.3ECh. 5 - Prob. 8.1ECh. 5 - Prob. 8.3ECh. 5 - Prob. 9ECh. 5 - Prob. 5.1.1PCh. 5 - Prob. 5.1.2PCh. 5 - Prob. 5.2PCh. 5 - Prob. 5.3PCh. 5 - Prob. 5.4PCh. 5 - Prob. 5.5PCh. 5 - Prob. 5.6PCh. 5 - Prob. 5.7PCh. 5 - Prob. 5.8.1PCh. 5 - Prob. 5.8.2PCh. 5 - Prob. 5.9PCh. 5 - Prob. 5.10PCh. 5 - Prob. 5.14PCh. 5 - Prob. 5.2.1CCh. 5 - Prob. 5.2.2CCh. 5 - Prob. 5.3.1CCh. 5 - Prob. 5.3.2CCh. 5 - Prob. 5.3.3CCh. 5 - Prob. 5.3.4C
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Accounting for Finance and Operating Leases | U.S. GAAP CPA Exams; Author: Maxwell CPA Review;https://www.youtube.com/watch?v=iMSaxzIqH9s;License: Standard Youtube License