On July 1.2020, the Prince of Wales, Inc. signs a 10-year non-cancellable lease agreement for a storage buildingowned by Colony, Inc. The following information pertains to the lease agreement.· Annual rental payment is P 750,000 beginning on July 1,2020. This rental payment includes P 50,000 for taxes andinsurance.• The fair value of the building on July 1,2020 is P 4,478,000.• The building has an estimated useful life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000.• Interest rate implicit on the lease is 10%.REQUIRED:a.) At what amount should Prince of Wales record the building on July 1,2020?b.) What is the annual depreciation on the building?d.) Prepare the entries in the books of Prince of Wales to record the foregoing for the years 2020 and 2021.Thecompany adopts the calendar year as its reporting period.

Calculation of lease liability, this the amount which Prince of Wales should record. Lease Term…

a.) At what amount should Prince of Wales record the building on July 1,2020? b.) What is the annual depreciation on the building? d.) Prepare the entries in the books of Prince of Wales to record the foregoing for the years 2020 and 2021. The company adopts the calendar year as its reporting period.

a.) At what amount should Prince of Wales record the building on July 1,2020? b.) What is the annual depreciation on the building? d.) Prepare the entries in the books of Prince of Wales to record the foregoing for the years 2020 and 2021. The company adopts the calendar year as its reporting period.

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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On July 1,2020, the Prince of Wales, Inc. signs a 10-year non-cancellable lease agreement for a storage buildingowned by Colony, Inc.The following information pertains to the lease agreement.• Annual rental payment is P 750,000 beginning on July 1,2020. This rental payment includes P 50,000 for taxes andinsurance.• The fair value of the building on July 1,2020 is P 4,478,000.• The building has an estimated useful life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000.• Interest rate implicit on the lease is 10%.REQUIRED:a.) At what amount should Prince of Wales record the building on July 1,2020?b.) What is the annual depreciation on the building?d.) Prepare the entries in the books of Prince of Wales to record the foregoing for the years 2020 and 2021. The company adopts the calendar year as its reporting period.
On April 1, 2022, the Bergify Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Knowie Inc. The following information pertains to the lease agreement: Annual rental payment is P750,000 beginning April 1, 2022. The rental payment includes P50,000 for taxes and insurance. The fair value of the building on April 1, 2022 is P4,478,000. The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. Implicit rate is 12%. (Round off the PV factor to four decimal places, then do not round off during the computation)How much is the impact of the lease transaction to the income statement of Bergify Corp. dated December 31, 2022?
Assume that on 1 January 2020, Kimberly-Clark Corp. signs a 10-year noncancelable lease agreement to lease a storage building from Trevino Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $83,824 beginning on 1 January 2020. 2. The fair value of the building on 1 January 2020 is $550,000. 3. The building has an estimated economic life of 12 years, with an unguaranteed residual value of $10,000. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is non-renewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 12% per year. The lessor's implicit rate is not known by Kimberly-Clark. 6. In addition to the annual rental payment, lessee is required to pay an annual insurance fee of $3,088 to lessor directly. The annual insurance fee is paid on every 1 January, starting from 1 January 2020. Required: (All the…
Assume that on December 31, 2019, Telco Company signs a 10-year, non-cancelable lease agreement to lease a storage building from Redfield Storage. The following information pertains to this lease agreement. - The agreement requires equal rental payments of €69,223 beginning on December 31, 2019.- Telco Company incurs initial direct costs of €5,000.- The fair value of the building on December 31, 2019, is €548,990.- The building has an estimated economic life of 12 years, a guaranteed residual value of €16,000, and an expected residual value of €10,000. Telco Company depreciates similar buildings using the straight-line method.- The lease is non-renewable. At the termination of the lease, the building reverts to the lessor.- Telco Company incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Telco Company.Instructions1. Compute the amount of the lease liability and right-of-use asset for Telco Company.2. Prepare the journal entries on the lessee’s books…
Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Cullumber Storage Company. The following information pertains to this lease agreement. The agreement requires equal rental payments of $68,499 beginning on December 31, 2024. The fair value of the building on December 31, 2024, is $501,036, The building has an estimated economic life of 12 years, a guaranteed residual value of $10,000, and an expected residual value of $5,600. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark. 1. 2. 3. 4. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is partially correct. Prepare the…
Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheridan Storage Company. The following information pertains to this lease agreement. 1. 2. 3. 4. 5. The agreement requires equal rental payments of $66,699 beginning on December 31, 2024. The fair value of the building on December 31, 2024, is $487,529. The building has an estimated economic life of 12 years, a guaranteed residual value of $9,000, and an expected residual value of $6,400. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark. Click here to view factor tablor
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Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sandhill Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $66.999 beginning on December 31, 2024. 2. The fair value of the building on December 31, 2024, is $490,629. 3. 4. 5. The building has an estimated economic life of 12 years, a guaranteed residual value of $11,000, and an expected residual value of $8,100. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided) (a) Your answer is partially correct. Prepare the journal…
Using (1) factor tables, (2) a financial calculator, or (3) Excel functions, calculate the amount Carla Vista Corp will record for the right-of-use asset and lease liability. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 5,275.76.) The amount of the right-of-use asset $ Prepare the initial entry to reflect the signing of the lease agreement. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 5,125.76.) Date July 1, 2023 Account Titles and Explanation Debit Credit
Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $ 67,299 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $ 492,571. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $ 10,500, and an expected residual value of $ 7,300. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark.
Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement 1. The agreement requires equal rental payments of $67,099 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $491,817. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $12,000, and an expected residual value of $9,000. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Kimberly-Clark. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this…
Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Cullumber Storage Company. The following information pertains to this lease agreement. 1. 2. 3. 4. 5. The agreement requires equal rental payments of $67,399 beginning on December 31, 2024. The fair value of the building on December 31, 2024, is $492,833. The building has an estimated economic life of 12 years, a guaranteed residual value of $9,500, and an expected residual value of $6,200. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)