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 9E
To determine
Introduction: Consolidation is a process in which financial statements of a subsidiary is merged with financial statements of the parent. In this process, the effect of intercompany transactions is eliminated.
To prepare: The eliminations and adjustments in the entry form.
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The Auto Clinic is a wholly owned subsidiary of Fast-Check Equipment Company. Fast-Check Equipment sells and leases 4-wheel alignment machines. The usual selling price of each machine is $35,000; it has a cost to Fast- Check Equipment of $25,000. On January 1, 2015, Fast-Check Equipment leased such a machine to Auto Clinic. The lease provided for payments of $9,096 at the start of each year for five years. The payments include $1,000 per year for maintenance to be provided by the seller. There is a bargain purchase price of $2,000 at the end of the fifth year. The implicit interest rate in the lease is 10% per year. The equipment is being depreciated over eight years.The amortization schedule for the lease prepared by Fast-Check Equipment is as attached:Prepare the eliminations and adjustments, in entry form, that would be required on a consolidated worksheet prepared on December 31, 2015.
Universal Leasing leases electronic equipment to a variety of businesses. The company’s primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term direct financing leases. Universal earns interest under these arrangements at a 10% annual rate. The company leased an electronic typesetting machine it purchased for $30,900 to a local publisher, Desktop Inc., on December 31, 2015. The lease contract specified annual payments of $8,000 beginning January 1, 2016, the inception of the lease, and each December 31 through 2017 (three-year lease term). The publisher had the option to purchase the machine on December 30, 2018, the end of the lease term, for $12,000 when it was expected to have a residual value of $16,000. Required: 1. Show how Universal calculated the $8,000 annual lease payments for this direct financing lease. 2. Prepare an amortization schedule that describes the pattern of interest revenue for Universal Leasing over the…
Universal Leasing leases electronic equipment to a variety of businesses. The company's primary service is providing alternate
financing by acquiring equipment and leasing it to customers under long-term leases.
. Universal earns interest under these arrangements at a 10% annual rate.
. Universal purchased an electronic typesetting machine on December 31, 2023, for $94,000 and then leased it to Desktop.
Incorporated, a local publisher.
The six-year operating lease term commenced January 1, 2024, and the lease contract specified annual payments of $8.400
beginning December 31, 2024, and on each December 31 through 2029.
. The machine's estimated useful life is 15 years with no estimated residual value.
• The publisher had the option to terminate the lease after four years. At the beginning of the lease, there was no reason to
believe the lease would be terminated.
Required:
1. Prepare the appropriate entries for Universal Leasing from the beginning of the lease through the end of 2024.…
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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