Assume that on 01 January 2015, Pecking Duck ltd sells a computer system to Liquidity Finance Co Ltd For Kshs. 510,000 and immediately leases the computer system back. The relevant information is as follows; 1. 111. iv. V. vi. The computer system was carried on Peking books at a value of Kshs. 450,000 The term of the non cancelleable lease if for 10 years. The lease agreement requires equal lease rental of 83,000.11 at the end of each year. The incremental borrowing rate for pecking is 12%, Pecking is aware of Liquidity Finance co's annual rental to ensure a rate of return of 10%. The computer system had a fair value of Kshs.510,000 on 01 January 2015 and an estimated economic life of 10 year. Pecking pays executory costs of 9,000 per year. Required Prepare the journal entries for both the lessee and lessor for 2015 to reflect the sale and lease back transaction.
Q: How does the concept of uniformity relate to comparability in the accounting literature?
A: Accounting, which is frequently referred to as simply "accounting," is the process of gathering,…
Q: The following were selected from among the transactions completed by Caldemeyer Co. during the…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: What is the lease expense that Mando will record at the end of each year of the lease? (Round to the…
A: 1.In simple words, From the point of view lessee includes Finance cost (Interest) of lease and…
Q: Khodra Construction has consistently used the percentage-of-completion method of recognizing income.…
A: Under the percentage of completion method Revenue, Expenses, and Gross profit are recognized each…
Q: The following are the selling price, variable costs, and contribution margin for one unit of each of…
A: Direct Labour Hour:— It is calculated by dividing direct labour cost by direct labour rate per hour.…
Q: Masters Corporation provided their production budget for the next quarter: April Units to be…
A: Units sold means the units that are sold to the customers by the entity during a particular period.…
Q: Statements of Financial Position 2020 2019 Cash $ 125 $ 80 Accounts receivable 68…
A: In this question, we need to compute the following. Cash collected from customers cash paid to…
Q: Suppose your company sells services for $325 cash this month. Your company also pays $100 in…
A: The cash flow statement is one of the important financial statements of the business. The various…
Q: Par Inc purchased 70.57% of Sub Corp's total outstanding voting shares for $275,447 on January 1,…
A: Option d is the ans
Q: From the following ledger balances, prepare a trial balance for the Lily Company at June 30, 2022.…
A: Trial balance is given below :
Q: Splish Landscaping began construction of a new plant on December 1, 2025. On this date, the company…
A: The company runs the business with assets such as land, building, computer, and motor vehicles.…
Q: Wishing Well Works makes outdoor statuary, and operates in the state of Washington. Payroll CA (8%…
A: FUTA is the federal unemployed tax that is charged for funding for unemployed persons and is paid by…
Q: Cool Sky reports the following for its first year of operations. The company produced 44,000 units…
A: VARIABLE COSTING Variable Costing is One of the Most important Cost Accounting Techniques.…
Q: A. Prepare a depreciation schedule for the asset’s entire useful life using each of the following…
A: 1. Straight line method of depreciation Straight-line depreciation is calculated by dividing a fixed…
Q: Superior Markets, Incorporated, operates three stores in a large metropolitan area. A segmented…
A: Solution 1 Computation of Avoidable Employee Salaries Sales salaries 98000 Delivery…
Q: Rough N' Tough (RNT) manufactures outdoors accessories. Management is considering producing the…
A: Make or buy is one of the decision making analysis that helps an entity to decide if it should make…
Q: Read the following passage, then answer the question that follow.…
A: Answer:- Accounting principle meaning:- The rules and regulations that businesses and other…
Q: Problem 8-9 (Algorithmic) Modified Accelerated Cost Recovery System (MACRS), Listed Property (LO…
A: Introduction:- The modified accelerated cost recovery system (MACRS) seems to be a depreciation…
Q: Statement of Cost of Goods Manufactured and Income Statement for a Manufacturing Company The…
A: The statement of cost of goods manufactured is prepared to record the cost of goods that are…
Q: Refer to the following selected financial information from Texas Electronics. Compute the company's…
A: Current Assets :— It is the assets which is owned by company for less than one year. Current…
Q: Part III. Prepare statement of cash flows (indirect method) and answer questions (P13-6B) The…
A: Cash flow statement ta statement which define cash inflows and outflows of a firm during a period of…
Q: During 2021, New Era Inc. constructed assets costing $1,000,000. The weighted-average accumulated…
A: Borrowing cost means where the assets like building , take substantial time to build , then interest…
Q: The company has 100,000 preferred shares issued and outstanding for the entire year. The preferred…
A: The potential equity shares are those shares that are convertible into common shares. It means these…
Q: ommon mistake that can occur in valuing a target would be: Group of answer choices Applying the…
A: When the company acquired another company than both are mixed to become one company but there should…
Q: What is the net balance of receivables at the end of April?
A: Date Particulars Amount ($) 01-04-2022 Opening Blance of Account receivables 30000…
Q: Which of the following is an external threat to revenue security? (select all that apply) Walk-outs…
A: Revenue is the total of all earnings generated by an organization through its normal business…
Q: The average price of a gallon of gas in 2018 increased $0.30 (12.4 percent) from $2.42 in 2017 to…
A: After deducting all of the expenditures that are associated with the production and sale of a…
Q: The statement of cash flows is the only required financial statement that is not prepared from an…
A: A cash flow statement is a financial statement that reports the sources of cash of an organization…
Q: Financial information for Jay Co. is provided below: BALANCE SHEETS…
A: Statement of Cash Flow - Statement of Cash Flow shows the inflow and outflow of cash during…
Q: E10.11 (LO 1) (Depreciation Change in Estimate) Machinery purchased for $60,000 by Tom Brady Co. in…
A: Answer Formula Straight line depreciation method = purchase price - salvage value /…
Q: Compute the annual dollar changes and percent changes for each of the following items. (Decreases…
A: Introduction:- Horizontal analysis is helps to measure of a company's financial statements over a…
Q: ccount for the exchange of non-monetary assets on the basis of the book value of the asset given up…
A: Assets - A resource having economic worth that a person, business, or nation possesses or controls…
Q: years ago for $100,000 and each piece of equipment had $52,000 of depreciation deducted for tax…
A: The organization sold three machinery with various different amounts while purchased and deppricated…
Q: During 2022, Demco Mining acquired a mineral mine for $1,500,000 of which $200,000 was ascribed to…
A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…
Q: What benefits do we get from learning a Managerial Accounting course?
A: Managerial accounting is very useful for the management to take business decisions as it provides…
Q: The following information applies to the questions displayed below.] Diego Company manufactures…
A: Advertising Compain Decision: The advertising policy would be accepted if is provides a positive…
Q: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating…
A: COMBINED MARGIN EARNED RATIO The Net operating Income of Last Year shall also Included in the…
Q: Sandra Ohm travels extensively for her employer. Her employer provides an allowance of $200 per day…
A: Transport allowance: Transport allowance in general refers to the allowance provided for the purpose…
Q: Sales Expenses: Cost of Goods Sold Depreciation Expense Salaries and Wages Expense Net Income…
A: In this question, we need to prepare operating activities section of statement of cash flows for…
Q: pect to sell tickets worth $29434. But if it rains on he money invested. If the weather forecast for…
A: The expected net value is calculated by multiplying the likelihood and value of the tickets. The…
Q: Sam earns the following amounts in the current year: Dividends received from a public Canadian…
A: Introduction: The net income from a property is the gross income minus the property maintenance…
Q: What account is debited when journalizing the payment of payro Salary Expense Payroll Tax Expense…
A: Introduction:- Journal entry is the first stage of accounting process. Journal entry used to record…
Q: Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial…
A: Incremental revenue per jar = Revenue per jar of silver polish - Revenue per 1/4th pound of Grit 337…
Q: 83. Assembly Bill 91 (AB 91)-Loophole Closure and Small Business and Working Families Tax Relief Act…
A: TCJA was put into effect in the year 2017. TCJA bought about major and substantial changes along…
Q: Millard Corporation is a wholesale distributor of office products. It purchases office products from…
A: Income Statement :An income statement summaries a company's sales, costs, and profitability over…
Q: For the highlighted in yellow portions what are the Excel formulaes used to calculate ratios?
A: 1. Current ratio: The current ratio estimates a firm's capacity of paying short-term or current…
Q: The master budget at Monroe Manufacturing last period called for sales of 42,000 units at $42 each.…
A: Variance arises when the actual cost is different from the budgeted cost. The variance is favorable…
Q: What amount should Makayla report as profit or loss from business? You may refer to her partially…
A: Profit and loss statement: A Profit and loss statement or income statement is one of the important…
Q: V1. The Beale Gardens Partnership has four general partners. Each partner's Schedule K-1 for the tax…
A: Basis limitation is a limitation on the amount of losses or deductions that a partner of a…
Q: Assuming that Arrow desires to sell its chairs for cost plus 40 percent of cost, what price should…
A: Per unit Rent Allocation = Annual year Rental Fee/Annual estimated units Per month Rent Allocation…
Do not answer in image Format
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Question 1. On 1 July 2019, Fisher Ltd decides to lease a cargo ship from XFinance Ltd. The term of the lease is 20 years. The implicit interest rate in the lease is 10 per cent. The fair value of the cargo ship at the commencement of the lease is $2,215,560. The lease is non-cancellable, and requires a lease payment of $300,000 on inception of the lease (on 1 July 2019) and lease payments of $250,000 on 30 June each year (starting 30 June 2020). Included within the $250,000 lease payments is an amount of $25,000 representing payment to the lessor for the insurance and maintenance of the cargo ship. There is no residual payment required. Annuity factor, n=20; r = 10% is 8.5136.a) Prove that the interest rate implicit in the lease is 10 per cent. b) Provide the entries for the lease in the books of Fisher Ltd as at 1 July 2019, and 30 June 2020. c) Provide the entries for the lease in the books of XFinance Ltd as at 1 July 2019, and 30 June 2020.Assume that on January 1, 2019, JK Restaurants sells a computer system to High Finance Company for P510, 000 and immediately leases the computer system back. The relevant information is as follows:1. The computer was carried at JK’s books at a value of P450, 000.2. The term of the noncancelable lease is 10 years. Title will transfer to JK.3. The lease agreement requires equal rental payments of P83, 000.11 at the end of each year.4. The incremental borrowing rate for Elmer is at 12%. Elmer is aware that High Finance Co., set the annual rental to ensure a rate of return of 10%5. The computer has a fair value of P680, 000 on January 1, 2019, and an estimated economic life of 10 years.6. Elmer pays executory costs of P9, 000 a year.Instructions:Prepare the journal entries for both the lessee and the lessor for 2019 to reflect the sale-leaseback agreement. No uncertainties exist, and collectability is reasonably certain.Assume that on December 31, 2018, Stora Enso (FIN) signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of €71,830 beginning on December 31, 2018. 2. The fair value of the building on December 31, 2018, is €525,176. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of €10,000, and an expected residual value of €7,000. Stora Enso depreciates similar buildings using the straight-line method. 4. The lease is non-renewable. At the termination of the lease, the building reverts to the lessor.5. Stora Enso's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Stora Enso. 1. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2018, 2019, and 2020.…
- On 1 July 2022, Moose Ltd leased a plastic-moulding machine from Wolf Ltd. On 1 July 2022 the machine was in the records of Wolf Ltd at its fair value of $75 000. The lease agreement contained the following provisions. Lease term 4 years Annual rental payment, in advance on 1 July each year $20 750 Residual value at end of the lease term $7 000 Residual guaranteed by lessee $4 000 Interest rate implicit in lease 8% The machine will be depreciated by Moose Ltd on a straight-line basis. The expected useful life of the machine is 5 years. Moose Ltd intends to return the machine to the Wolf Ltd at the end of the lease term. The lease has been classified as a finance lease by Wolf Ltd. Included in the annual rental payment is an amount of $750 to cover the costs of maintenance and insurance paid for by the lessor. Initial direct costs for setting up the lease were incurred by both parties: $1 518 for Moose Ltd and $1 687 for Wolf Ltd. Required: Prepare…18. Which of the following lease arrangements would most likely be accounted for as a finance lease by the lessor if it is under US GAAP instead of IFRS? * a. The lease agreement runs for 15 years and the economic life of leased property is 20 years. However, the title is not transferred to the lessee at the end of the lease term. b. The present value of future payments is P73,600 when the fair value of the property is P80,000 at the end of the first lease year. c. The lessee shoulders the gain or O loss from fluctuation in the fair value of the underlying asset. d. The lessee may renew the two- year lease for two additional years; originally the lease payments were P10,000 monthly. Renewed lease term calls for P11,000 monthly rental payment.Assume that on December 31, 2021, Stora Enso (FIN) signs a 10-year, non-cancelable leaseagreement to lease a storage building from Sheffield Storage. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of €71,830 beginning on December 31, 2021. 2. The fair value of the building on December 31, 2021, is €525,176. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of €10,000, and an expected residual value of €7,000. Stora Enso depreciates similar buildings using the straight-line method. 4. The lease is non-renewable. At the termination of the lease, the building reverts to the lessor. 5. Stora Enso’s incremental borrowing rate is 8% per year. The lessor’s implicit rate is not known by Stora Enso. Instructions Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2021, 2022, and…
- Question: Burt Ltd enters into a non-cancellable five-year lease agreement with Earnie Ltd on 1 July 2015. ... Burt Ltd enters into a non-cancellable five-year lease agreement with Earnie Ltd on 1 July 2015. The lease is for an item of machinery that, at the inception of the lease, has a fair value of $1294384.The machinery is expected to have an economic life of six years, after which time it will have an expected residual value of $210000. There is a bargain purchase option that Burt Ltd will be able to exercise at the end of the fifth year for $280000.There are to be five annual payments of $350000, the first being made on 30 June 2016. Included within the $350000 lease payments is an amount of $35000 representing payment to the lessor for the insurance and maintenance of the equipment. The equipment is to be depreciated on a straight-line basis. REQUIRED (a) Determine the rate of interest implicit in the lease and calculate the present value of the minimum lease payments.On 1 July 2020, Cooper Ltd leased a plastic-moulding machine from Jersey City Ltd. The machine cost Jersey City Ltd $260,000 to manufacture and had a fair value of $302,035 on 1 July 2020. The lease agreement contained the following provisions: Lease term 4 years Annual rental payment, in advance on 1 July each year $81,500 Residual value at end of the lease term $30,000 Residual guaranteed by lessee nil Interest rate implicit in lease 8% The lease is cancellable only with the permission of the lessor. The expected useful life of the machine is 6 years. Cooper Ltd intends to return the machine to the lessor at the end of the lease term. Included in the annual rental payment is an amount of $1500 to cover the costs of maintenance and insurance paid for by the lessor. Instructions: a)Explain why the lease should be classified as a finance lease by both lessee and lessor based on the guidance provided in Accounting standard. b) Prepare the lease payment schedule for the lessee (show…Bergify Corp. has entered into a lease arrangement with Foodie Ltd. in which it has agreed to lease an item of machinery from Foodie Ltd. on the following terms: Date of commencement of lease - July 1, 2022 Duration of lease - 8 years Implicit rate of interest - 6% Initial up-front payment - P200,000 Lease payments at the end of each year - P100,000 The lease is considered non-cancellable. The economic life of the machinery is 10 years. However, Bergify Corp. will return the machinery to Foodie Ltd. at the end of the lease term. At this stage it is expected that the machinery will have a residual unguaranteed value of P80,000 at the end of the lease term. The company uses straight line method. (Round off the PV factor to four decimal places)How much is the carrying value of the right of use assets on July 1, 2022?
- Entity 5 leases a machine from ABC ltd. On 1 January 2022. The terms of the leasing contract are as follows: Entity 5 will make a lease payment of £100,000 per year to ABC Ltd at the end of each of the next 5 years. The implied interest rate for the lease is 10% per year. At the end of the lease term, the ownership of the machine would be transferred from ABC Ltd to Entity 5. Entity 5 would normally depreciate similar machines on a straight-line basis over 4 years. Required Show how the lease should be accounted for in Entity 5’s financial statements for the year ended 31 December 2022. If the book value of the machine was £320,000 , how much of profit or loss should be accounted for by ABC Ltd?Assume that Lenovo(CHN) leased equipment that was carried at a cost of ¥ 150.000,000 to Sharon Swander Company. The term of the lease is 6 years beginning January 1,2015, with equal rental payments of ¥30.044,000 at the beginning of each year. All executory costs are paid by Swander directly to third parties. The fair Value of the equipment at the inception of the lease is ¥150.000,000. The equipment has a useful life of 6 years with no residual value. The lease has an implicit interest rate of 8%, no bargain-purchase option, and no transfer of title. Prepare Lenovo’s January 1. 2015.Journal entries at the inception of the lease.Question 1: HKU Leasing agrees to lease equipment to Minion Furniture on January 1, 20X1. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 7 years. 2. The cost of the machinery is $700,000. The fair value of the asset on January 1, 20X1 is $700,000. 3. The lease contains a bargain purchase option of $60,000 exercisable at the end of lease term. At the end of the lease term, the asset reverts to the lessor and expected residual value is zero. Minion uses straight-line depreciation for all long-term assets. 4. HKU’s implicit rate is 6%, and Minion’s incremental borrowing rate is 6% 5. The lease is a non-cancellable lease. First payment is made in advance and the remaining payment are made on Dec 31 each year. Required: 1. Calculate the amount of the annual rental payment required. 2. Prepare journal entries to record the lease for HKU (lessor) for the year 20X1. 3.…