On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Leasepayments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value byNIC. Portions of the United Leasing's lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Jan. 120212021202220232024202520261.2.WN3.4.20382039204020417Payments14,50014,50014,50014,50014,50014,50014,50014,50014,50038,4495.6. Net investmentEffective Decrease inInterestBalance11,80011,58411,35111,09910,8275,2504,5103,7112,848Lease termAsset's residual valueEffective annual interest rateLease payments for UnitedLease payments for NIC7.8. Right-of-use assetRequired:1. What is the lease term In years?2. What is the asset's residual value expected at the end of the lease term? (Round your answers to nearest whole dollar.)3. What is the effective annual Interest rate? (Round your percentage answer to 1 decimal place.)4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.)5. What is the total amount of lease payments for NIC? (Round your answers to nearest whole dollar.)6. What is United's net Investment at the beginning of the lease (after the first payment)? (Round your answers to nearest wholedollar.)7. What is United's total effective interest revenue recorded over the term of the lease? (Round your answers to nearest whole dollar.)8. What amount would NIC record as a right-of-use asset at the beginning of the lease? (Round your answers to nearest wholedollar.)Total effective interest revenue14,5002,7002,9163,1493,4013,6739,2509,99010,78935,601OutstandingBalance162,001147,501144,801141,885138,736135,335131,66256,38046,39035,601years%

ade annually. Title does not transfer to the lessee the United Leasing's lease amortization schedule a (Use appropriate factor(s) from the tables provid ents 588 588 500 588 588 Effective Interest 11,800 11,584 11,351 11 899 Decrease in Balance 14,500 2,700 2,916 3,149 3 481 Outstanding Balance 162,001 147,581 144,881 141,885 138,736 135 335

ade annually. Title does not transfer to the lessee the United Leasing's lease amortization schedule a (Use appropriate factor(s) from the tables provid ents 588 588 500 588 588 Effective Interest 11,800 11,584 11,351 11 899 Decrease in Balance 14,500 2,700 2,916 3,149 3 481 Outstanding Balance 162,001 147,581 144,881 141,885 138,736 135 335

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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1. 2. The lessee makes a lease payment of $75,200 to the lessor for equipment in an operating lease transaction. Wildhorse Company leases equipment from Noble Construction Inc. The present value of the lease payments is $658,000. The lease qualifies as a capital lease.. Prepare the journal entries that the lessee should make to record the above transactions assuming the entities report under ASPE. (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.) No. Account Titles 1. Debit Credit
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of-use asset for P986,986 plus P93,301 loss d. Sunset Co. should ignore the modification Reconstruction of information 15. The noncurrent liabilities section of Calm Co.'s statement of financial position as of December 31, 20x1 reported a lease liability of P1,066,986, net of current portion. Lease payments of P200,000 are due every January 1st of the year. incremental borrowing rate is 11% and the lessor's implicit rate, which is known to Calm Co., is 10%. What amount of lease liability, net of current portion, should Calm Co. report Calm Co.'s on December 31, 20x2? a. 871,052 b. 973,685 c. 986,986 d. 1,066,986
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A18-11 Lessee Accounting; Amortization Table; Entries: (LO 18-2, 18-4) Watson Co. entered into a lease arrangement for a truck on 1 April 20X2 that had the following terms. • The lease payments are $13,400 per year, payable each 1 April for four years. The lease may be renewed at the option of the lessor for a further five years for $4,000 per year. • Based on an allocation of the lease payment on relative stand-alone prices, the lease and non-lease components (maintenance) are $12,100 and $1,300 respectively. Expected amounts to be paid under the residual value guarantee are $11,400 if the lessee ends the lease at the end of the first lease term, and $3,800 if they end the lease at the end of the second lease term. • The leased asset has a useful life of ten years and a fair value of $64,000. The Interest rate implicit in the lease is 8%. . (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Calculate the right-of-use asset.…