At the beginning of its fiscal year, Lakeside Incorporated leased office space to LTT Corporation under a ten-year operating lease agreement. The contract calls for quarterly rent payments of $28,000 each. The office building was acquired by Lakeside at a cost of $2.3 million and was expected to have a useful life of 25 years with no residual value. What will be the effect of the lease on Lakeside's earnings for the first year (ignore taxes)? Note: Enter your answer rounded to the nearest whole dollar. Lakeside its earnings by

At the beginning of its fiscal year, Lakeside Incorporated leased office space to LTT Corporation under a ten-year operating lease agreement. The contract calls for quarterly rent payments of $28,000 each. The office building was acquired by Lakeside at a cost of $2.3 million and was expected to have a useful life of 25 years with no residual value. What will be the effect of the lease on Lakeside's earnings for the first year (ignore taxes)? Note: Enter your answer rounded to the nearest whole dollar. Lakeside its earnings by

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 9Q

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At the beginning of its fiscal year, Lakeside Incorporated leased office space to LTT Corporation under a seven-year operating lease agreement. The contract calls for quarterly rent payments of $25,000 each. The office building was acquired by Lakeside at a cost of $2 million and was expected to have a useful life of 25 years with no residual value. What will be the effect of the lease on Lakeside’s earnings for the first year (ignore taxes)? Note: Enter your answer rounded to the nearest whole dollar.
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Shamrock, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $40,000 from United Corporation. The agreement stipulates the following. ● Rental payments of $9,435 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. ● Shamrock must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. ● Shamrock must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. ● Shamrock paid legal fees of $3,000 in executing the lease. Assuming Shamrock’s incremental borrowing rate is 9% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Shamrock. (Credit account titles are automatically indented when the amount is…