Algoma, Inc., signs a five-year lease for office equipment with Office Solutions. The present value of the lease payments is $15,499. Prepare the journal entry that Algoma records at the inception of this finance lease.
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Algoma, Inc., signs a five-year lease for office equipment with Office Solutions. The present value of the lease
payments is $15,499. Prepare the
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- Pharoah Company recently signed a lease for a new office building, for a lease period of 10 years. Under the lease agreement, a security deposit of $14,110 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year.Zachariah City's water utility fund enters into a five-year lease for maintenance equipment on July 1, 2022. The City's fiscal year end is December 31, 2022. Assuming lease payments are $50,000, the interest rate is 5%, and the present value of the lease payments is $227,298. 1. Record any necessary entry at the inception of the lease. 2. Record the first lease payment of $50,000 on July 2, 2022. 3. Record any necessary amortization on December 31, 2022. 4. Record the second lease payment of $50,000 on July 2, 2023. Reset. Now show me what these four journal entries would be if it had been the City's general fund that entered into the lease.Sunland Company specializes in leasing large storage units to other businesses. Sunland entered a contract to lease a storage unit to Riskey, Inc. for 4 years when that particular storage unit had a remaining useful life of 5 years. The fair value of the unit was $13,000 at the commencement of the lease on January 1, 2020. The present value of the five equal rental payments of $3,481 at the start of each year, plus the present value of a guaranteed residual value of $1,000, equals the fair value of $13,000, Sunland’s implicit rate of return on the lease of 9%. The following is a correct, complete amortization schedule created by Sunland. Date Lease Payment Interest (9%) onOutstanding Lease Receivable Reduction ofLease Receivable Balance ofLease Receivable 1/1/20 $13,000 1/1/20 $3,481 $3,481 9,519 1/1/21 3,481 $857 2,624 6,895 1/1/22 3,481 621 2,860 4,035 1/1/23…
- 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. $97,926On 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.[The following information applies to the questions displayed below.] On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The lease payment schedule follows. Date January 1, Year 1 December 31, Year 1 December 31, Year 2 (A) Beginning Balance of Lease Liability $ 51,000 33,000 16,981 (B) Debit Interest on Lease Liability 6.003% X (A) $0 1,981 1,019 $ 3,000 + (C) Debit Lease Liability (D) (B) $ 18,000 - 16,019 16,981 $ 51,000 (D) Credit Cash Lease Payment $ 18,000 18,000 18,000 $ 54,000 (E) Ending Balance of Lease Liability (A) (C) $ 33,000 16,981 0
- 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 3.88965At the beginning of the year, Cazenovia, Inc. Entered into a five-year lease for equipment that was valued at $95,000. The company will be required to make annual lease payments of $22,000 for five years at year-end. The implicit interest rate is 5% and the company classified the lease as a finance lease. Required What is the balance sheet value of the lease asset and the lease liability? Why was the lease categorized as a finance lease? How much is interest expense in the first year? What is the reduction in the lease liability in the first year? What is the total expense if straight-line amortization is used for the leased asset?On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $509,761 over a five-year lease term (also the asset's useful life). payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's Incremental borrowing rate is 8% the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Incorporated at a cost of $4.3 million. 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) Required: 1. What amount related to the lease would IC report In Its balance sheet on December 31, 2024 (Ignore taxes)? 2. What amount related to the lease would IC report in its Income statement for the year ended December 31, 2024 (Ignore taxes)? Note: For all requirements, enter your answers in whole dollars and not in millions. Round the…
- On January 1, Mason Co. entered into a three-year lease on a building. The current value of the three lease payments is $60,000. Required Prepare entries for Mason to record (a) the lease asset and obligation at January 1 and (b) the $20,000 straight-line amortization at December 31 of the first year.On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease agreement qualifies as a finance lease and calls for Blue to make semiannual lease payments of $212,190 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue’s incremental borrowing rate is 10%, the same rate Big uses to calculate lease payment amounts. Determine the present value of the lease payments on June 30, 2024, that Blue uses to record the right-of-use asset and lease liability. What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2024? (Ignore taxes.) What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2024? (Ignore taxes.)Zhang Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $52,538 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 5%. The asset being leased cost Mann $230,000 to produce. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Determine the price at which the lessor is "selling" the asset (present-value of the lease payments). 2. What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31 (ignore taxes)? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the price at which the lessor is "selling" the asset (present value of the lease payments). Note: Round your intermediate and final answers to the nearest whole…