Direct Finance Lease – Lessor (PAS 17 and PFRS 16) Problem 18. On January 1,2011, SM leased an equipment to RFM Inc. with the following details: Cost of Machinery P3,760,100 Residual value – guaranteed 400,000 Useful life and lease term 4 years Implicit interest rate 10% Annual rental is payable in advance on January 1 Required: Based on the result of your audit, determine the following: ____________1. Annual Rental ____________2. Gross Receivable or Investment ____________3. Unearned Interest ____________4. Interest Income on 2011 ____________5. Carrying Value of Lease Receivable on January 1,2012

Direct Finance Lease – Lessor (PAS 17 and PFRS 16) Problem 18. On January 1,2011, SM leased an equipment to RFM Inc. with the following details: Cost of Machinery P3,760,100 Residual value – guaranteed 400,000 Useful life and lease term 4 years Implicit interest rate 10% Annual rental is payable in advance on January 1 Required: Based on the result of your audit, determine the following: 1. Annual Rental 2. Gross Receivable or Investment 3. Unearned Interest 4. Interest Income on 2011 5. Carrying Value of Lease Receivable on January 1,2012

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.5AP

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Direct Finance Lease - Lessor (PAS 17 and PFRS 16) Problem 18. On January 1,2011, SM leased an equipment to RFM Inc. with the following details: Cost of Machinery Residual value – guaranteed Useful life and lease term P3,760,100 400,000 4 years 10% Implicit interest rate Annual rental is payable in advance on January 1 Required: Based on the result of your audit, determine the following: 1. Annual Rental 2. Gross Receivable or Investment 3. Unearned Interest 4. Interest Income on 2011 5. Carrying Value of Lease Receivable on January 1,2012
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2011. Edison purchased the equipment from International Machines at a cost of $112,080. Related Information: 2 years (8 quarterly periods) $15,000 at the beginning of each period 2 years $112,080 8% Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the inception of the lease through January 1, 2012. Edison's financial year ends December 31.
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $247,570. Other information: Lease term Annual payments Life of asset 4 years $71,000 on January 1 each year Incremental rate 4 years Fair value of asset Implicit interest rate 10% $247,570 10% There is no expected residual value. Required: Prepare appropriate journal entries for Low-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.)
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2011. Edison purchased the equipment from International Machines at a cost of $112,080. Related Information: 2 years (8 quarterly periods) $15,000 at the beginning of each period 2 years $112,080 Lease term Quarterly rental payments Economic life of asset Fair value of asset 8% Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the inception off the lease through January 1, 2012. Depreciation is recorded at the end of each financial year (December 31) on a straight-line basis.
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2024. Edison purchased the equipment from International Machines at a cost of $131,379. 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) Related Information: Lease term Quarterly rental payments Economic life of asset 2 years (8 quarterly periods) $ 17,000 2 at the beginning of each period years $ 131,379 Implicit interest rate (Also 4% Fair value of asset lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the beginning of the lease through January 1. 2025. Edison's fiscal year ends December 31. Complete this question by entering your answers in the tabs below. Amortization Schedule General Journal
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
Instruction: Prepare the amortization schedule
12:08 In your audit of XYZ Co., you noted a P1,100,000 balance under the rent expense account which was recorded on December 31, 2021. Upon examination of lease contract, you found that this pertains to an 8-year lease contract with a lessor beginning January 1, 2021. The payments are due every December 31 of each year beginning. December 31, 2021. The asset is expected to be sold for P500,000 after its estimated useful life of 10 years. The lease contract provided the lessee an option to purchase the underlying asset for P200,000 at the end of its lease term. Based on assessment, there is reasonable certainty that the option will be exercised by the lessee. Furthermore, the annual payments include P100,000 reimbursement to the lessor for maintenance costs incurred on behalf of the lessee. The lease has an implicit rate of 8% which was known to the lessee. Required: a. Prepare a working paper showing computations for (a) initial measurement of the lease liability and right of use…
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $334.936. Other information: 5 years $79,000 on January 1 each year 5 years Lease term Annual payments Life of asset Fair value of asset $334,936 Implicit interest rate 9% Incremental rate 9% There is no expected residual value. Required: Prepare appropriate journal entries for Low-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 1 2 3 > Record the entry at the inception of the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018
Compute the following Total interest income to be recognized over the lease term
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Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $366,951. Other information: 5 years $88,000 on January 1 each year 5 years Lease term Annual payments Life of asset Fair value of asset $366,951 Implicit interest rate 10% Incrementa1 rate 10% There is no expected residual value. Required: Prepare appropriate journal entries for Low-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 1 2 3 Record the entry at the inception of the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018