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The following facts pertain to a non-cancelable lease agreement between Splish Brothers Leas lessee. Commencement date May 1, 2025 Annual lease payment due at the beginning of each year, beginning with May 1, 2025 $20,456.70 Bargain purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment Lessor's cost 10 years $65,000 Fair value of asset at May 1, 2025 $98,000.20 Lessor's implicit rate 4 % Lessee's incremental borrowing rate 4 % The collectibility of the lease payments by Splish Brothers is probable. 5/1/25 Lease Receivable 5/1/25 12/31/25 Cost of Goods Sold Sales Revenue Inventory (To record the lease) Cash Lease Receivable (To record lease payment) Lease Receivable Interest Revenue 5/1/26 Cash Lease Receivable Interest Revenue 12/31/26 Lease Receivable Interest Revenue 98000.20 65000 20456.70 20456.70 98

The following facts pertain to a non-cancelable lease agreement between Splish Brothers Leas lessee. Commencement date May 1, 2025 Annual lease payment due at the beginning of each year, beginning with May 1, 2025 $20,456.70 Bargain purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment Lessor's cost 10 years $65,000 Fair value of asset at May 1, 2025 $98,000.20 Lessor's implicit rate 4 % Lessee's incremental borrowing rate 4 % The collectibility of the lease payments by Splish Brothers is probable. 5/1/25 Lease Receivable 5/1/25 12/31/25 Cost of Goods Sold Sales Revenue Inventory (To record the lease) Cash Lease Receivable (To record lease payment) Lease Receivable Interest Revenue 5/1/26 Cash Lease Receivable Interest Revenue 12/31/26 Lease Receivable Interest Revenue 98000.20 65000 20456.70 20456.70 98

Business/Professional Ethics Directors/Executives/Acct
Business/Professional Ethics Directors/Executives/Acct
8th Edition
ISBN:9781337485913
Author:BROOKS
Publisher:BROOKS
Chapter8: Subprime Lending Fiasco-ethics Issues
Section: Chapter Questions
Problem 3.7EC
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The following facts pertain to a non-cancelable lease agreement between Splish Brothers Leas lessee. Commencement date May 1, 2025 Annual lease payment due at the beginning of each year, beginning with May 1, 2025 $20,456.70 Bargain purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment Lessor's cost 10 years $65,000 Fair value of asset at May 1, 2025 $98,000.20 Lessor's implicit rate 4 % Lessee's incremental borrowing rate 4 % The collectibility of the lease payments by Splish Brothers is probable.
Transcribed Image Text:The following facts pertain to a non-cancelable lease agreement between Splish Brothers Leas lessee. Commencement date May 1, 2025 Annual lease payment due at the beginning of each year, beginning with May 1, 2025 $20,456.70 Bargain purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment Lessor's cost 10 years $65,000 Fair value of asset at May 1, 2025 $98,000.20 Lessor's implicit rate 4 % Lessee's incremental borrowing rate 4 % The collectibility of the lease payments by Splish Brothers is probable.
5/1/25 Lease Receivable 5/1/25 12/31/25 Cost of Goods Sold Sales Revenue Inventory (To record the lease) Cash Lease Receivable (To record lease payment) Lease Receivable Interest Revenue 5/1/26 Cash Lease Receivable Interest Revenue 12/31/26 Lease Receivable Interest Revenue 98000.20 65000 20456.70 20456.70 98
Transcribed Image Text:5/1/25 Lease Receivable 5/1/25 12/31/25 Cost of Goods Sold Sales Revenue Inventory (To record the lease) Cash Lease Receivable (To record lease payment) Lease Receivable Interest Revenue 5/1/26 Cash Lease Receivable Interest Revenue 12/31/26 Lease Receivable Interest Revenue 98000.20 65000 20456.70 20456.70 98
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