Accounting on Jan 1 2019 ABC Company leased copiers from DEF Company for a 7- year period ending on December 31, 2025. At the time of the lease agreement, the fair value of the copiers was $450,000. The lease requires 7 annual payments of $80,000 on December 31 each year. The first payment was made at the inception of the lease on January 1, 2019. The lease requires a guaranteed residual value of $110,000. On January 1, 2019, the expected residual value was $150,000 and the useful life of the copiers was 12 years. The lease included a 10% discount rate. Use excel and PV tables. show excel formulas Date Payment Effective Decrease in Outstanding Interest Balance Balance

Accounting on Jan 1 2019 ABC Company leased copiers from DEF Company for a 7- year period ending on December 31, 2025. At the time of the lease agreement, the fair value of the copiers was $450,000. The lease requires 7 annual payments of $80,000 on December 31 each year. The first payment was made at the inception of the lease on January 1, 2019. The lease requires a guaranteed residual value of $110,000. On January 1, 2019, the expected residual value was $150,000 and the useful life of the copiers was 12 years. The lease included a 10% discount rate. Use excel and PV tables. show excel formulas Date Payment Effective Decrease in Outstanding Interest Balance Balance

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

19 On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $125,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,214,031 lease liability. Determine the interest rate implicit in the lease agreement. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
On July 1, 2020 an entity entered into an 8-year lease of a floor of a building with the following terms: Annual rental for the first three years payable at the end of each year 300,000 Annual rental for the next five years payable at the end of 400,000 each year Implicit interest rate 10% Compute the balance of lease liability on December 31, 2020. (Use four decimal places for your present value ex:1.3284) O 1,773,408 O 1,884,916 O 1,138,816 O 1,829,152
A lessee company signed a lease for equipment from a lessor on January 1, Year 1. The lease requires equal rental payments of $18,820 at the beginning of each year of the term. The PV of the lease payments is $108,950. The company pays all executory costs directly to third parties. The appropriate interest rate is 8.65%. Assume IFRS 16 applies. Both the lessor and lessee have December 31 year ends. How much wil be the balance of the Lease Liability in the lessee's books at the end of Year 1 after all adjusting entries assuming (1) the fair value of the equipment equals the PV of the lease payments and (2) any interest is accrued directly to the Lease Liability? 1. $88,134 2. $90,582 3. $93,030 4. $95,478 5. $97,926
Accounting On 30 June 2022, Sock Ltd leased equipment to Shoe Ltd. The equipment was in the records of Sock Ltd on 30 June 2022 at its fair value of $123,000. The lease agreement contained the following provisions: Lease term 3 years Economic life of equipment 4 years Annual rental payment, in arrears (first payment on 29/6/23) $45,000 Residual value at end of the lease term $10,000 Residual value guaranteed by lessee $4,000 Interest rate implicit in lease 8% Present value of $1 in 3 years at 8 % 0.7938 Present value of an annuity of $1 for 2 payments at 8% 1.7833 Present value of an annuity of $1 for 3 payments at 8% 2.5771 The equipment will be depreciated by Shoe Ltd on a straight-line basis. Shoe Ltd intends to return the equipment to Sock Ltd at the end of the lease term. The lease has been classified as a finance lease by Sock Ltd. Initial direct costs for setting up the lease were incurred by both parties: $855 for Shoe…
On July 1, 2020, Shroff Company leased a warehouse building under a 10-year lease agreement. The lease requires quarterly lease payments of $4,500. The first lease payment is due on September 30, 2020. The lease was reported as a finance lease using an 8% annual interest rate. a. Prepare the journal entry to record the commencement of the lease on July 1, 2020. b. Prepare the journal entries that would be necessary on September 30 and December 31, 2020. c. Post the entries from parts a and b in their appropriate T-accounts. d. Prepare a financial statement effects template to show the effects template to show the effects of the entries from parts a and b on the balance sheet and income statement.
Sur Food Corp., leased machine from Al-Urami Corp. the lease agreement for the O.R 750,000 (fair and present value of the lease payment) machine specified five equal payments at the end of each year. The implicit interest rate was 9% Required: 1. Prepare the journal entry for Al-Urami Corp. at the inception of the lease on January 1, 2019. 2. Prepare an amortization schedule for the three-year term of the lease Note: Present value of an ordinary annuity of $1.n=5,1%39% is 3.88965
Darwin Company leased machinery for 10 years, its useful life, with effect from January 1, 2020. At that date, the fair value of the machinery was P4,900,000. Annual rentals of P700,000 are payable in advance on January 1 and the interest rate implicit in the lease is 9%. The first rental payment was made on January 1, 2020. What is the total lease liability (principal and interest) which Darwin Company should recognized in its statement of financial position on December 31, 2020?
Gadubhai
Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms: Annual lease payment: $990,000 Term of lease: 5 years Interest rate: 4% Lease commences on January 1, 2023 Payments are made on December 31 of each year in the lease term For parts a and b: a. Prepare journal entries to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as a finance lease. b. Prepare journal entries to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as an operating lease. Operating Lease Finance Lease a. Finance lease: Date Jan. 1, 2023 Account To record the start of the finance lease. Dec. 31, 2023 To record the amortization of leased asset. Dec. 31, 2023 Dec. 31, 2024 Dec. 31, 2024 To record the lease payment. To record the amortization of leased asset. To record the lease payment. > > > > > > > > > > Debit Credit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Autumn plc enters a lease on January 1, 2019 to use machinery for its operations. The terms of the lease are as follows: The term of the lease is 4 years. The lease agreement is non-cancellable requiring equal rental payments of $25,711.11 at the beginning of each year (annuity-due basis) The machine had a fair value at the commencement of the lease of $100,000, an estimated economic life of five years and a guaranteed residual value of $5,000 The lease contains no renewal options Autumn’s incremental borrowing rate is 5% per year Autumn uses the straight-line method to depreciate its machinery The lessor sets the annual rental rate of return of 4% per year and Autumn is aware of this rate. Required: Prepare the necessary journal entries for 2019. State two major ratios of Autumn plc that would be affected by the above lease arrangement
WHAT IS THE INCREASE IN LEASE LIABILITY?
7