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. Please answer E21-11, and show all your workings clearly.

. Please answer E21-11, and show all your workings clearly.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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E21-11. Please answer E21-11, and show all your workings clearly.

E21.11 (LO 3) (Lessor Entries with Bargain Purchase Option) A lease agreement between Mooney Leasing and Choi Group is described in E21.10. Instructions Refer to the data in E21.10 and do the following for the lessor. (Round all numbers to the nearest yen). a. Discuss the nature of this lease for Mooney and compute the amount of the lease receivable at commencement of the lease. b. Prepare a lease amortization schedule for Mooney for the 5-year lease term. c. Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2022 and 2023. The lessor's accounting period ends on December 31. Reversing entries are not used by Mooney.
Transcribed Image Text:E21.11 (LO 3) (Lessor Entries with Bargain Purchase Option) A lease agreement between Mooney Leasing and Choi Group is described in E21.10. Instructions Refer to the data in E21.10 and do the following for the lessor. (Round all numbers to the nearest yen). a. Discuss the nature of this lease for Mooney and compute the amount of the lease receivable at commencement of the lease. b. Prepare a lease amortization schedule for Mooney for the 5-year lease term. c. Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2022 and 2023. The lessor's accounting period ends on December 31. Reversing entries are not used by Mooney.
E21.10 (LO 2) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing and Choi Group, a lessee (amounts in thousands). Commencement date Мay 1, 2022 Annual lease payment due at the beginning of each year, beginning with May 1, 2022 ¥20,471.94 Bargain purchase option price at end of lease term ¥4,000.00 Lease term 5 years Economic life of leased equipment 10 years Lessor's cost ¥65,000.00 Fair value of asset at May 1, 2022 ¥91,000.00 Lessor's implicit rate 8% Lessee's incremental borrowing rate 8% The collectibility of the lease payments by Mooney is probable.
Transcribed Image Text:E21.10 (LO 2) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing and Choi Group, a lessee (amounts in thousands). Commencement date Мay 1, 2022 Annual lease payment due at the beginning of each year, beginning with May 1, 2022 ¥20,471.94 Bargain purchase option price at end of lease term ¥4,000.00 Lease term 5 years Economic life of leased equipment 10 years Lessor's cost ¥65,000.00 Fair value of asset at May 1, 2022 ¥91,000.00 Lessor's implicit rate 8% Lessee's incremental borrowing rate 8% The collectibility of the lease payments by Mooney is probable.
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