. Please answer E21-11, and show all your workings clearly.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
E21-11. Please answer E21-11, and show all your workings clearly.
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.
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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