Company A (sse) has reached a lease agreement with Company (essor) to lease a noe boom lill beginning January 1, Year 1 The lease agreement contains the following information • The lease is for three years requiring annual payments at the beginning of the year of $10,213 (annuity-due basis). The boom lift has a fair value at the beginning of the lease of $40,000; an estimated economic life of five years; and en unquaranteed residual value of $12,500. • Present value of the residual value is $10,798 • There are no renewal options. At the end of the lease the boom lift will be returned to Company B • The lease does not pass any of the finance lease tests. What is the journal entry that Company A should make on January 1, Year 1 to record the lease? Debit Leased Asset for $40,000; Credit Lease Liability for $40,000 Debit Leased Asset for $29,787; Credit Lease Liability for $29,787 Debit Leased Asset for $27,500; Credit Lease Liability for $27,500 Debit Leased Asset for $29,202; Credit Lease Liability for $29,202

Company A (sse) has reached a lease agreement with Company (essor) to lease a noe boom lill beginning January 1, Year 1 The lease agreement contains the following information • The lease is for three years requiring annual payments at the beginning of the year of $10,213 (annuity-due basis). The boom lift has a fair value at the beginning of the lease of $40,000; an estimated economic life of five years; and en unquaranteed residual value of $12,500. • Present value of the residual value is $10,798 • There are no renewal options. At the end of the lease the boom lift will be returned to Company B • The lease does not pass any of the finance lease tests. What is the journal entry that Company A should make on January 1, Year 1 to record the lease? Debit Leased Asset for $40,000; Credit Lease Liability for $40,000 Debit Leased Asset for $29,787; Credit Lease Liability for $29,787 Debit Leased Asset for $27,500; Credit Lease Liability for $27,500 Debit Leased Asset for $29,202; Credit Lease Liability for $29,202

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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2.
Metlock Company leases a building and land. The lease term is 8 years and the annual fixed payments are $840,000. The lease arrangement gives Metlock the right to purchase the building and land for $13,550,000 at the end of the lease. Based on an economic analysis of the lease at the commencement date, Metlock is reasonably certain that the fair value of the leased assets at the end of lease term will be much higher than $13,550,000. What are the total lease payments in this lease arrangement? Total lease payments Click if you would like to Show Work for this question: Open Show Work
Figy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000 was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000 each. The rate implicit in the lease is 10%. Figy Co incurred initial direct costs of X2 to set up the lease. Required: 1. Give your own X2 then calculate the cost of the right-of-use asset as at 1 January 20X5? 2. What is the carrying amount of the lease liability at 31 December 20X6? 3. What amount will be charged to the statement of profit or loss in respect of this asset for the year ended at 31 December 20X6? 4. Prepare necessary accounting entries related to this lease agreement for the year ended at 31 December 20X5.
The following facts pertain to a non-cancelable lease agreement between Cullumber Leasing Company and Crane Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 2025 Residual value of equipment at end of lease term, guaranteed by the lessee January 1, 2025 $125,377 $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, 2025 $660,000 Lessor's implicit rate 8 % Lessee's incremental borrowing rate 8 % 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. Click here to view factor tables. (a) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.) Date 1/1/25 $ 1/1/25…
The following information relates to an equipment lease with an inception date of January 1: Fair value of equipment at lease inception, $56,000 Lease term, 5 years Economic life of property, 6 years Implicit interest rate, 7% Annual lease payment due on December 31, $13,200 The equipment reverts back to the lessor at the end of the lease term. How much is recorded as the lease liability on the lease inception date? Select one: a. $66,000 b. $56,000 c. $57,911 d. $54,123
White Ltd leased a parcel of land for a period of 10 years. The lease payments required include a payment up-front of $248531, followed by another 9 payments of equal value at the end of every year up to the end of the ninth year. The implicit rate in the lease is 7 percent. What is the value of the right-of-use asset at the commencement of the lease?
YK Incorporated leased road building equipment from Bajan Leasing on January 1, 2021. Bajan purchased the equipment from International Machines at a cost of $148,930. Related Information: Lease term 2 years (4 semi-annual periods) Quarterly rental payments $40,000 at the beginning of each period Economic life of asset 2 years Fair value of asset $148,930 Implicit interest rate 10% (Also lessee’s incremental borrowing rate) Required:Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis.
On January 1, 20X0, an entity leased an equipment for four years at an annual rental of $170,000 payable at the end of each year. The estimated useful life of the equipment is four years. The present value factor of an ordinary annuity of 1 for four years of an implicit rate of 12% is 3.0373. The lease provides for a transfer of ownership of the equipment to the lessee at the end of the lease term. Compute for the depreciation expense for the right of use of asset for the year ended December 31, 20x0.
6 Company A (lessee) has reached a lease agreement with Company B (assor) to kase a new carpet weaving machine beginning January 1, Year 1. The lease agreement contains the following information • The lease is for five years, requiring annual payments of $10,355.67 at the beginning of the year. • The weaving machine has a fair value at the beginning of the lease of $50,000; an estimated economic life of five years; and a guaranteed residual value of $2,500 (Company A expects that the value will be greater). • Present value of the weaving machine is $47,945.18. • There are no renewal options. At the end of the lease, the weaving machine will be returned to Company B. • Company A depreciates similar equipment that it purchases on a straight-line basis. • Company B sels the annual lease rate al 5% and Company A is aware of the rate. • The lease is a finance lease. COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment Date January 1, Year 1 January 1, Year 1 January…
On January 1, 2024, Blue Co. recorded a right-of-use asset of $869,628 in a 10-year operating lease. The lease calls for ten annual payments of $120,000 at the beginning of each year. The interest rate charged by the lessor was 8%. What amount will Blue Co. record for amortization expense on December 31, 2024? O $60,030 O $64,832 O $86,963 $59,970 ring
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 3.88965
he following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Ivanhoe Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $99,118 Residual value of equipment at end of lease term, guaranteed by the lessee $53,000 Expected residual value of equipment at end of lease term $48,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $554,000 Lessor’s implicit rate 6 % Lessee’s incremental borrowing rate 6 % 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.Click here to view factor tables. (a) Your answer is partially correct. Try again. Prepare an amortization schedule that would be suitable for the lessee for the lease term.…