$100,000 $85,000 $20,711 $5,000 Lessee expected salvage value $8,000 4% Asset FMV Asset Book Value January 1 payments Guaranteed Salvage Value Implicit and incremental rates Five-year lease; five-year asset
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- 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 - P100,000Alto Leases a car on 1st Jan 2020 for 2 years Option to extend 1 more year (reasonably certain to exercise) Useful life 10 years Lease payments $10,000/ year for 2 years Lease payment $15,000 for extension (1 year) Direct costs of $3,000 Interest rate is 5% All payments are due at the end of the year Determine initial carrying amount asset and liabilityQuestion 11. C Ltd has a fiscal year end of Sep. 30th. On Oct. 1, 20X8 C Ltd leases an asset to a lessee for a term of five years. The lessee is required to make five lease payments of £27,500, starting with Oct 1, 20X8. The fair value of the asset on Oct 1, 20X8 is £113,500. C Ltd incurs initial direct costs of £421 and the rate of interest implicit in the lease is 12%. At the end of the lease term, ownership of the asset will remain with C Ltd, the asset is expected to have come to the end of its economic life and to have a residual scrap value of £5,100. i) Provide two reasons for why this lease is a finance lease and not an operating lease. ii) Calculate the net investment in the lease at commencement. iii) Prepare lessor's journal entries for the year ending Sep. 30th, 20X9.
- 1- On January 1, year 8, Big Company leased equipment to Small Corporation under an operating lease. The present value of the end-of-year lease payments of $207,878 discounted at the implicit rate of 5% is $900,000. The expected economic life of the asset is seven years. The lease term is five years. What would Small Corporation record as amortization in year 8? Multiple Choice $135,000. $162,878. $180,000. $0. -------------------------------------------------------------------- 2- A Co. recorded a right-of-use asset of $400,000 in a 10-year operating lease. Payments of $65,100 are made annually at the end of each year. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after the first year will be: Multiple Choice $360,000. $374,900. $376,900. $400,000.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, 2018Homework 1 of Chapter 15. Q1. Python Company leased equipment from Hope Leasing on January 1, 2020. Hope recently purchased the equipment at a cost of $222,664. Other information: Lease term Annual payments Life of asset Fair value of asset 3 years $80,000 on January 1 each year 3 уears $222,664 8% 8% Implicit interest rate Incremental rate There is no expected residual value. Required: 1) Show how Hope determined the $80,000 annual lease payments. Fair Value: 3 aaa, o loH - Present Valuee 2) Prepare appropriate journal entries for Hope for 2020 and 2021. Round your answers to the nearest whole dollar amounts. Prepare an amortization schedule for Hope. Outstanding Balance (lease receivable) 222. tolo4 Effective Interest Revenue Decrease in Balance Date Cash Payments 1/1/2020 1/1/2020 12/31/2020 12/31/2021 80.000 80.000 $0.000 gross lease investment
- 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 0Date of lease – 7/1/19 Term – 3 years (expires 7/1/22) Semi-annual lease payments of $100,000 every 7/1 and 1/1 Lessee’s incremental borrowing rate – 6% Lessor’s implicit rate of return – 5% (NOT known to lessee) Lessor’s cost of asset leased - $250,000 Guaranteed residual value - $70,000 (lessee believes fair value of the asset at the end of the lease will be greater than $70,000). Lessee and Lessor both have a December 31st Requirements: Assume the lease is treated as a finance lease: Determine the present value of the lease payments Prepare an amortization table for the lease payments for the lessee Determine the fair value of the lease from the lessor’s perspective Prepare the lessor’s amortization table for this leaseReardon Company leased an asset from Mackinac Company. Data: ● ● ● ● . Five-year, noncancellable lease begins 1/1/22. Asset life is five years Payments of $20,711 each January 1. Asset FMV $100,000; Lessor book value $85,000 Guaranteed salvage value $5,000; $1,500 salvage value expected by lessee Applicable rate is 4% Reardon's 12/31/22 Right of Use asset balance will be approximately Select one: O a. $79,259 O b. $78,923 O c. $76,712 O d. $79,013 Oe. $76,137
- North Blue Company leased a new copier from Kixko Company on June 1, 2019, under a lease with the following information: Lease term 10 years Annual rental payable at the beginning of each lease year $45,000 Useful Life of machine 10 years Implicit interest rate 12% Present value factor for an annuity of 1 in advance for 10 periods at 12% 6.3282 Present Value factor for 1 for 10 periods at 12% 0.32197 North Blue has the option to purchase a machine on June 1, 2023, by paying $75,000, which approximates the fair value of the machine on the option exercise date. On May 1, 2019, North Blue should record a right-of-use asset in the amount of a.$284,769. b.$292,991. c.$450,000. d.$276,548.Problem 4 On January 1, 2021, Twice Company entered into a lease agreement with the following: Floor space Annual rental payable at the end of each year Implicit rate in the lease 1,500 square meters 200,000 12% 12 years 6.1944 Lease term Present value of an ordinary annuity at 12% for 12 periods On January 1, 2024, the lessee and the lessor agreed to amend the original terms of the lease with the following information: Additional floor space Increase in rental payable at the end of each year Implicit rate in lease Present value of an ordinary annuity of 1 at 10% for 9 periods 2,000 square meters 300,000 10% 5.759 1. What amount should be reported as lease liability on January 1, 20217 2. What amount should be reported as additional lease liability on January 1, 2024? 3. What amount should be reported as total interest expense for 20247Problem 21-03 (Part Level Submission) Oriole Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $45,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Oriole’s incremental borrowing rate is 9%. Oriole is unaware of the rate being used by the lessor. At the end of the lease, Oriole has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Oriole uses the straight-line method of depreciation on similar owned equipment.Click here to view factor tables. (a) Prepare the journal entries, that Oriole should record on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry…