10. On January 1, 2012, Thelma Industries leased equipment to Tricia Company for a four- year period ending December 31, 2015. The equipment cost Thelma P300,000 and has an expected useful life of five years. Annual payments are P118,951, including P10,000 executory costs. The equipment's fair value is P400,000. The lessee guarantees the residual value of P80,000. Lease payment is due every December 31 and Tricia made the first payment on December 31, 2012. Thelma incurred P15,000 costs contract. The rate implicit in the lease after adjustments for the costs incurred by Thelma is 10%. Present value of 1

10. On January 1, 2012, Thelma Industries leased equipment to Tricia Company for a four- year period ending December 31, 2015. The equipment cost Thelma P300,000 and has an expected useful life of five years. Annual payments are P118,951, including P10,000 executory costs. The equipment's fair value is P400,000. The lessee guarantees the residual value of P80,000. Lease payment is due every December 31 and Tricia made the first payment on December 31, 2012. Thelma incurred P15,000 costs contract. The rate implicit in the lease after adjustments for the costs incurred by Thelma is 10%. Present value of 1

Name: 10. On January 1, 2012, ThelmaIndustries leased equipmentto Tricia Co
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: 10. On January 1, 2012, ThelmaIndustries leased equipmentto Tricia Company for a four-year period ending December31, 2015. The equipment costThelma P300,000 and has anexpected useful life of fiveyears. Annual payments areP118,951, including P10,000e

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Hurricane Company leased an excavator on January 1, 2018. According to the terms of the agreement, Hurricane Company will pay 20.000 TL for 6 years, starting from July 1, 2019. The interest rate of the agreement is 9%. Hurricane Company has the option to purchase this vehicle for 5.000 TL at the end of lease period. The net present value of the future payments is 92.699,71 TL. The useful life is estimated as 10 years. The residual value is estimated as 10.000 TL. Straight-line method of depreciation is utilized. Prepare the lease amortization table and make the journal entries for this lease.
On January 2, 2018, Hernandez, Inc. signed a ten-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of P300,000 starting at the beginning of the first year, with title passing to Hernandez at the expiration of the lease. Hernandez treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Hernandez uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of P1,800,000, based on implicit interest of10%. In its 2018 income statement, what amount of interest expense should Hernandez report from this lease transaction?
19. KAPIT LANG CEREBELLUM leased a new machine to MALAPIT NA ANG FINISH LINE on January 01, 2012. The lease expires on January 01, 2017. Annual rental is P900,000. Additionally, on January 01, 2012, MALAPIT NA ANG FINISH LINE paid P500,000 to KAPIT LANG CEREBELLUM as a lease bonus and P250,000 as a security deposit to be refunded upon expiration of the lease. In KAPIT LANG CEREBELLUM's 2012 statement of comprehensive income, the amount of rental revenue should be a. P1,400,000 b. P1,250,000 c. P1,000,000 d. P900,000
Wildhorse Limited has signed a lease agreement with Lantus Corp. to lease equipment with an expected lifespan of eight years, no estimated salvage value, and a cost to Lantus, the lessor of $199,000. The terms of the lease are as follows: ● The lease term begins on January 1, 2019, and runs for 5 years. ● The lease requires payments of $45,359 at the beginning of each year starting January 1, 2019. ● At the end of the lease term, the equipment is to be returned to the lessor. ● Lantus’ implied interest rate is 7%, while Wildhorse’s borrowing rate is 8%. Wildhorse uses straight-line depreciation for similar equipment. The year-end for both companies is December 31. Assume that both companies follow ASPE. (a)Determine the present value of the minimum lease payments Ans 199,000 B.) Prepare Wildhorse’s lease amortization schedule using the effective interest method. (Round answers to 0 decimal places, e.g. 5,275.) Date Payment Interest Principal Balance…
edom Company, the lessor, enters into a lease with Davis Company to lease equipment to Davis beginning January 1, 2013. The lease terms, provisions, and related events are as follows: 11 1. The lease term is 5 years. The lease is noncancelable and requires annual rental receipts of $100,00 to be made in advance at the beginning of eacy year. 2. The equipment costs $313,000. the equipment has an estimatd life of 6 years and, at the end of the lease term, has an unguaranteed residual value of $20,000 accruing to the benefit of Edom. 3. Davis agrees to pay all executory costs. 4. The interest rate implicit in the leae is 14%. 5. The intial direct costs are insignificant and assumed to be zero. 6. The collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the amount of unreimbursable costs yet to be incurred by the lessor. Prepare journal entries for Edom for the years 2013 and 2014. Do not give answer in image formate
(Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $278,072, and its unguaranteed residual value at the end of the lease term is estimated to be $20,000. National will pay annual payments of $40,000 at the beginning of each year and all maintenance, insurance, and taxes. George incurred costs of $180,000 in manufacturing the equipment and $4,000 in negotiating and closing the lease. George has determined that the collectibility of the lease payments is reasonably predictable,that no additional costs will be incurred, and that the implicit interest rate is 10%.Instructions(a) Discuss the nature of this lease in relation to the lessor and compute the amount of each of the following items.(1) Lease receivable.(2) Sales price.(3) Cost of sales.(b) Prepare a 10-year…
(a) In accordance with HKFS 16, it requires lessee to recognize a right-of-use asset and a lease liability for all leases. Therefore, Cherry Ltd should recognize the initial measurement of a right-of-use asset and a lease liability as follows: Discount rate Unpaid lease payment -2nd - 5th payment $800,000 x 3.17 Initial measurement of a lease liability Initial measurement of lease liability Lease payment made at commencement date Initial direct cost – commission Initial direct cost – legal fee Initial measurement of a right-of-use asset (b) The lease liability from 2013 to 2017 are as follows: PV 10% 3.17 2,536,000 2,536,000 2,536,000 800,000 20,000 15,000 3,371,000 Lease liability Year Opening balance Lease Lease liability payment after lease Interest expenses 10% Closing balance 1 Jan (a) (b) payment (c) = (a) - (b) 31 Dec (d) = (c) x 10% |(e) = (c) +(d) 2013 2,536,000 2,536,000 253,600 2,789,600 2014 2,789,600 800,000 1,989,600 198,960 2,188,560 2015 2,188,560 800,000 1,388,560…
On 1 January 1, 20x9 Brix Co entered into an agreement to lease a machine that had an estimated life of five years. The lease period is also four years at which point the asset will be returned to the leasing company. Brix Co is required to pay for all maintenance and insurance costs relating to the asset. Annual rentals of $10,000 are payable in advance from January 1, 20x9. The machine is expected to have a nil residual value at the end of its life. The machine had a fair value of $35,000 at the inception of the lease. The lessor includes a finance cost of 10% per annum when calculating annual rentals. a) How should the lease be accounted for in the financial statements of Shrub for the year end 31 December 20x9? b) Record the journal entries for the lease…
18) The Thomson Company (lessee) leased equipment from Columbus Industries on January 1, 2021. Columbus(lessor) manufactured the equipment at a cost of $270,000. Other information: Lease term Annual payments Life of asset Lessor's implicit interest rate Lessee's incremental rate 3 years $120,000 beginning Jan. 1, 2021 3 years 8% 9% Required: Round your answers to the nearest whole dollar amounts. 1. Calculate the amount of lease receivable that Columbus would report in this sales-type lease. Round to nearest dollar. Show calculations. If not, no credit. 2. Prepare the appropriate journal entries for Columbus on January 1, 2021. Round to nearest dollar. 3. Prepare the adjusting journal entry for Columbus on December 31, 2021. Round to nearest dollar.
On January 1, 2020, Sitra Company leased equipment from National Corporation. Lease payments are $100,000, payable annually beginning on January 1, 2020 for 20 years. The lease is non-cancelable. The following information pertains to the agreement: 1. The fair value of the equipment on January 1, 2020 is $850,000. 2. The estimated economic life of the equipment was 25 years on January 1, 2020 with guaranteed residual value of $25,000. 3. The lease is non-renewable. At the termination of the lease, the equipment reverts to the lessor. 4. The lessor's implicit rate is 10% which is known to Sitra. Sitra's incremental borrowing rate is 12% (The PV of $1 for 20 periods at 10% is 0.14864 and the PV for an ordinary annuity of $1 for 20 periods at 10% is 8.51356). 5. Sitra uses straight-line method for depreciation. Instructions: A) Compute the present value of minimum lease payments. B) Prepare all necessary journal entries on the lessee's books for the year 2020.