Reporting a Finance LeasePier10 Inc. entered into a five-year lease and recorded a right-of-use asset and lease liability of $88,000 onJanuary 1. Pier10 Inc. was aware of the lessor's implicit rate of interest of 5%. The equipment under lease haan estimated five-year useful life with no residual value. The first lease payment of $19,358 was due uponcommencement of the lease.Show the balance sheet presentation on December 31,and the income statement presentation for the year ended December 31.Note: Round your answers to the nearest whole dollar..Note: Do not use negative signs with your answers.AssetsBalance SheetNoncurrent assets:Right-of-Use AssetLiabilitiesCurrent liabilities:Lease LiabilityNoncurrent liabilities:Lease LiabilityIncome StatementDecember 3188,000 *19,358 ✓0 %December 31ExpensesInterest Expense$3,432 ✔Amortization Expense17,600 ✓

A lease is a contractual agreement granting the right to use an asset, such as property or…

Assets Balance Sheet December 31 Noncurrent assets: Right-of-Use Asset Liabilities Current liabilities: Lease Liability Noncurrent liabilities: Lease Liability Income Statement 88,000 x 19,358 v 0 x December 31 Expenses Interest Expense $ 3,432 Amortization Expense 17,600

Assets Balance Sheet December 31 Noncurrent assets: Right-of-Use Asset Liabilities Current liabilities: Lease Liability Noncurrent liabilities: Lease Liability Income Statement 88,000 x 19,358 v 0 x December 31 Expenses Interest Expense $ 3,432 Amortization Expense 17,600

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

jt.3
Question Content Area A six-year operating lease requires annual rent payments of $15,000 for years 1, 2, and 3, and annual rent payments of $10,000 for years 4, 5, and 6. The agreement also requires the lessor to pay a $2,800 annual insurance premium for the leased property. Which of the following amounts should be recognized as the rental revenue in year 1 by the lessor? $10,000 $16,800 $15,000 $13,500
Recording Operating Lease-Lessor Gomez Inc. leases a vehicle from CareMax Inc. on January 1 for a three-year period. Gomez agrees to make $9,600 annual payments beginning on January 1. Prepare the journal entries during the year for CareMax Inc. assuming that the fair value of the vehicle is $44,800 and it has a useful life of 6 years with no salvage value (depreciated using the straight-line method). CarMax Inc. appropriately classifies the lease as an operating lease. Note: Round your answers to the nearest whole dollar. Account Name Date Jan, 1 Dec. 31 Dec. 31 Check To record receipt of lease payment To record lease revenue + # To record depreciation → = → # Dr. 0 0 0 0 0 0 Cr. 0 0 0 0 0 0
Exhibit Leased assets have an expected life of 5 years Depreciation is straight line Annual lease payment is $1,400 Interest rate is 12% 3) Find the total expense in Year 1 if exhibit refers to an Operating Lease 4) Find the total expensee in Year 1 if exhibit refers to a Capital Lease
For questions related to the LESSEE (COMPLICATION, INC.), assume that they employ the STRAIGHT-LINE METHOD OF DEPRECIATION. Use the Present Value Factors as is (straight from the calculator, no rounding), round off final answers to the NEAREST WHOLE NUMBER.(1) LEASE LIABILITY ON JANUARY 1, 20X1 (2) RIGHT-OF-USE ASSET ON JANUARY 1, 20X1 (3) TOTAL Finance Income OVER THE LEASE TERM
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
Produc 13 Payne Oil Company began operations during 2019. The following information is as of 12/31/19 and early 2020. Expense lifting costs as lease operating expense. Transactions, 2019 Lease A Lease B Lease C *a. Acquisition costs of unde- veloped leases (1/8 RI) $ 60,000 $ 30,000 $ 40,000 90,000 *b. G&G costs 60,000 50,000 *c. Drilling costs d. Drilling results: 200,000 230,000 Drilling completed; dry 250,000 Drilling not completed Drilling completed 700,000 bbl 300,000 bbl (as of 12/31) Proved reserves Proved developed reserves e. Production f. Lifting costs December 31 10,000 bbl $ 250,000 Recorded DD&A Impaired lease 40% g. Transactions, 2020 h. Assume on January 2 of the second year (2020) that disaster struck both Lease A and Lease B. Give the entries to record abandonment of Lease A and Lease B. Assume equipment costing $15,000 was salvaged from Lease A. Assume this is not a post-balance sheet event that would give rise to changes in the balance sheets or income statements of…
Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018. Hi-Tech manufactured the equipment at a cost of $94,500. Other information: 3 years $49,000 on January 1 each year 3 years $136, 382 Lease term Annual payments Life of asset Fair value of asset Implicit interest rate 8% Incremental rate 8% There is no expected residual value. Required: Prepare appropriate journal entries for Hi-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.) View transaction list Journal entry worksheet 2 3 > Record the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018
Problem 21-01 The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Concord Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $113,055 Residual value of equipment at end of lease term, guaranteed by the lessee $54,000 Expected residual value of equipment at end of lease term $49,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $585,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5…
Determining Amounts in Operating Lease-Lessee Kulver's Inc. leases equipment from Equip Inc. on January 1 under a 3-year operating lease. Kulver's agrees to pay Equip Inc. $15,000 annually with the first payment due on January 1. As an incentive for Kulver's to sign the lease by January 1, Equip Inc. paid Kulver's Inc. $700. Kulver's also incurred legal fees for the review of the lease agreement ($200) and salaries for employees involved in negotiating the lease ($1,300). Assuming an incremental borrowing rate of 7% for Kulver's Inc., determine the value of the lease liability and the right-of- use asset on January 1 for Kulver's. Note: Round your answers to the nearest whole dollar. Lease liability $ 11,620 X Right-of-use asset $ 41,620✔ Check
hik..3
34 Initial direct costs incurred by the lessor in an operating lease should beA. expensed in the year of incurrence by including them in the cost of goods sold or by treating them as a selling expense.B. deferred and recognized as reduction in the interest rate implicit in the lease.C. capitalized as part of asset cost and depreciated over the lease term.D. deferred and carried on the statement of financial position until the end of the lease term.