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a. Compute the amount of th. b. Prepare a 1o-year lease am Prenare all of the lessee's i

a. Compute the amount of th. b. Prepare a 1o-year lease am Prenare all of the lessee's i

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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P21-10. Please solve P21-10 and show all workings clearly. 

P21.9 (LO 3, 4) Groupwork (Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) Kobayashi Group manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Japan Airlines (JAL) (JPN) for a period of 10 years. The normal selling price (amounts in thousands) of the equipment is ¥299,140, and its unguaranteed residual value at the end of the lease term is estimated to be ¥20,000. JAL will pay annual payments of ¥40,000 at the beginning of each year. Kobayashi incurred costs of ¥180,000 in manufacturing the equipment and ¥4,000 in sales commissions in closing the lease. Kobayashi has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%.
Transcribed Image Text:P21.9 (LO 3, 4) Groupwork (Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) Kobayashi Group manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Japan Airlines (JAL) (JPN) for a period of 10 years. The normal selling price (amounts in thousands) of the equipment is ¥299,140, and its unguaranteed residual value at the end of the lease term is estimated to be ¥20,000. JAL will pay annual payments of ¥40,000 at the beginning of each year. Kobayashi incurred costs of ¥180,000 in manufacturing the equipment and ¥4,000 in sales commissions in closing the lease. Kobayashi has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%.
P21.10 (LO 2) (Lessee Computations and Entries, Lease with Unguaranteed Residual Value) Assume the same data as in P21.9, with JAL (JPN) having an incremental borrowing rate of 8%. Instructions a. Compute the amount of the initial lease liability. b. Prepare a 1o-year lease amortization schedule. c. Prepare all of the lessee's journal entries for the first year. Assume straight- line depreciation.
Transcribed Image Text:P21.10 (LO 2) (Lessee Computations and Entries, Lease with Unguaranteed Residual Value) Assume the same data as in P21.9, with JAL (JPN) having an incremental borrowing rate of 8%. Instructions a. Compute the amount of the initial lease liability. b. Prepare a 1o-year lease amortization schedule. c. Prepare all of the lessee's journal entries for the first year. Assume straight- line depreciation.
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