Hurricane Company leased an excavator on January 1, 2018. According to the terms of the agreement, Hurricane Company will pay 20.000 TL for 6 years, starting from July 1, 2019. The interest rate of the agreement is 9%. Hurricane Company has the option to purchase this vehicle for 5.000 TL at the end of lease period. The net present value of the future payments is 92.699,71 TL. The useful life is estimated as 10 years. The residual value is estimated as 10.000 TL. Straight-line method of depreciation is utilized. Prepare the lease amortization table and make the journal entries for this lease.

Hurricane Company leased an excavator on January 1, 2018. According to the terms of the agreement, Hurricane Company will pay 20.000 TL for 6 years, starting from July 1, 2019. The interest rate of the agreement is 9%. Hurricane Company has the option to purchase this vehicle for 5.000 TL at the end of lease period. The net present value of the future payments is 92.699,71 TL. The useful life is estimated as 10 years. The residual value is estimated as 10.000 TL. Straight-line method of depreciation is utilized. Prepare the lease amortization table and make the journal entries for this lease.

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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The lease agreement specified quarterly payments of $3,000 beginning September 30, 2021, the beginning of the lease, and each quarter (December 31, March 31, and June 30) through June 30, 2024 (three-year lease term). The florist had the option to purchase the truck on September 29, 2023, for $6,000 when it was expected to have a residual value of $10,000. The estimated useful life of the truck is four years. Mid-South Auto Leasing's quarterly interest rate for determining payments was 3% (approximately 12% annually). Mid-South paid $25,000 for the truck. Both companies use straight-line depreciation or amortization. Anything Grows' incremental interest rate is 12%. Hint: A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (i.e., a BPO). (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the amount of selling profit that Mid-South…
On 1st January 2015, Trademart SAOG entered into an agreement to lease an item of plant from a manufacturer for 5 years. The lease requires five annual payments of RO 200,000 each commencing from 1st January 2016. The plant would have a useful life of five years and with no residual value. The present value of the total lease payments is OMR 840,000. The cost of capital used is 12% find the initial amount of lease liability right to use asset recognition in the first year in the boaks of lessee. ion Lease liability OMR 640,000 and right to use asset OMR 840,000 None of them Lease liability OMR 840,000 and right to use asset OMR 840,000 Lease liability OMR 640,000 and right to use asset OMR 640,000
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Crane Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $91,000. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Crane expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2020. Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. Prepare the journal entry at commencement of the lease for Crane. Prepare the journal entry at commencement of the lease for Sharrer.
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Sage Hill Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 4 years and requires equal rental payments of $113,273 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $400,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 9%.Click here to view factor tables.Prepare Sage Hill’s 2019 and 2020 journal entries, assuming Sage Hill depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit enter an…
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Crane Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $85,500. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has à 3-year useful life and no residual value. The lease was signed on January 1, 2020. Crane expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2020. Click here to view factor tables. (b) Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Date /1/20 12/31/20 2/31/21 2/31/22 Rent Receipt/ Payment Interest Revenue/ Expense $ Reduction of Principal $ Receivable/Lia 1 SUPPORT