In which scenario must a lessee record a right-of-use asset and lease liability upon commencement of a lease agreement? Multiple Choice An agreement to lease equipment valued at $14,000 with a term of 12 months An agreement to lease equipment valued at $4,000 with a term of 4 years An agreement to lease equipment valued at $14,000 with a term of 4 years An agreement to lease equipment valued at $4,000 with a term of 12 months

In which scenario must a lessee record a right-of-use asset and lease liability upon commencement of a lease agreement? Multiple Choice An agreement to lease equipment valued at $14,000 with a term of 12 months An agreement to lease equipment valued at $4,000 with a term of 4 years An agreement to lease equipment valued at $14,000 with a term of 4 years An agreement to lease equipment valued at $4,000 with a term of 12 months

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 8MC: At its inception, the lease term of Lease G is 65% of the estimated remaining economic life of the...

See similar textbooks

Related questions

Q: July 12: Paid amount owed to Tabby Company. Activity Operating v Accounts Cash Decrease, Account…

A: Transaction: It is an event between a buyer and seller which involves money. It is an exchange of…

Q: What privacy concerns are in the Covid 19 benefit fraud by bryan alan sparks

A: The COVID-19 pandemic brought about an urgent need for economic relief, prompting governments…

Q: help please answer in text form with proper workings and explanation for each and every part and…

A: Understanding VLOOKUP The VLOOKUP function syntax is:VLOOKUP(lookup_value, table_array,…

Q: Determine whether each cash payment procedure is an internal control strength or weakness. Cash…

A: Note: Since you have posted multiple questions, we will solve the first question. Please submit a…

Q: Brief Exercise 7-18 (Algo) Account for the exchange of long-term assets (LO7-6) China Inn and…

A: As per IAS 16, Property, plant and Equipment, The asset acquired in exchange for another asset is…

Q: Give one example of an error that a check digit control detects.

Q: PB10-5 Recording and Explaining the Early Retirement of Debt [LO 10-3] QPF Movie Group owns and…

A: Answer 1: Journal Entries:

Q: help please answer in text form with proper workings and explanation for each and every part and…

A: Concept Introduction In engineering, tolerances define the allowable limits of variation in a…

Q: i need details explanatio

A: Under FIFO method, unit purchase first, sold first. Cost of goods sold means we need calculate cost…

Q: I need help understanding step by step how to slove this

A: Introduction: Direct material: Direct material refers to the material used by the company in…

Q: Choose the term that best describes static data? O Static data does not change once it is created. O…

A: static data does not change once it is createdThe best describes static data does not change once it…

Q: Could you please provide the solution without using the excel?

A: concept. Formula. 1. F = S * ert where , F= future price. S= spot price r= interest rate t= time…

Q: Explain Charges and Liens?

A: The question is based on the concept of legal terms used to grant security against loan or debt.

Q: What exactly are reversing entries, and why do we need them?

A: Journal entry is the entry which is made at the date on which the transaction which relates to the…

Q: What is an important advantage gained by using a spreadsheet?

A: Spreadsheet is an important tool for recording information in the form of rows and columns into…

Q: can i please get a correct answer for that question

A: The statement of comprehensive income is computed by adding the net income – which is found by…

Q: Why is it important to read the Misc Notes section?

A: Notes to financial statements are additional information and explanations provided in a company's…

Q: Data from different sources linked together to find the intrinsic value hidden beneath is which…

A: Data are collected, processed, analyzed, and stored by the business. There are different phases of…

Q: How is the access control list approach different from RBAC?

Q: What does data cleansing mean?

Q: Can you share an example and explainwhy the CVP is important please.

A: Cost-Volume-Profit Analysis: Cost-volume-profit (CVP) analysis is a means to find out how changes in…

Q: Can someone help me with the part b and c please?

A: Direct material usage variance is otherwise called as Direct Material Quantity variance. It is a…

Q: Discuss the three common methods of handling errors in transaction files.

A: Errors in the books of accounting should be corrected as soon as possible, so that the financial…

Q: What problems does the data cleansing step attempt to resolve?

A: Accounting information system : AIS is a structure used in business for collecting, storing,…

Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Please I need fast please check plagiarism

In which scenario must a lessee record a right-of-use asset and lease liability upon commencement of a lease agreement?
Multiple Choice
An agreement to lease equipment valued at $14,000 with a term of 12 months
An agreement to lease equipment valued at $4,000 with a term of 4 years
An agreement to lease equipment valued at $14,000 with a term of 4 years
An agreement to lease equipment valued at $4,000 with a term of 12 months

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Finance lease

VIEW

Step 2: Explanation to the answer

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Use the following information to decide whether this equipment lease qualifies as an operating, sales-type, or direct financing lease to a lessor. a. There is no transfer of ownership at the end of the lease term. There is no bargain purchase option. The lease term is 60% of the economic life of the leased property. The present value of lease payments, including a residual value guaranteed by the lessee, is 100% of the fair value of the leased property to the lessor. The collectability of the lease payments is reasonably assured. The leased asset was not of a specialized nature. b. Same as (a), except that the residual value is guaranteed by a third party, not the lessee. The present value of the residual value guarantee is 15% of the fair value of the leased property. c. Same as (a), except that: the present value of the lease payments, including a residual value guaranteed by the lessee, is only 50% of the fair value of the leased asset. The collectability of the minimum lease payments is not predictable.
Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease of equipment entered into on March 1, 2019. The lease is classified as a sales-type lease by the lessor (Anson Company) and as a finance lease by the lessee (Bullard Company). Assume that the lease payments are nude at the beginning of each month, interest and straight-line depreciation are recognized at the end of each month, and the residual value of the leased asset is zero at the end of a 3-year life. Required: 1. Record the lease (including the initial receipt of 2,000) and the receipt of the second and third installments of 2,000 in Ansons accounts. Carry computations to the nearest dollar. 2. Record the lease (including the initial payment of 2,000), the payment of the second and third installments of 2,000, and monthly depreciation in Bullards accounts. The lessee records the lease obligation at net present value. Carry computations to the nearest dollar.
Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.
Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.
On the lessor’s accounting, which of the following situations would prima facie lead to a lease contract being classified as an operating lease? Lease term is for a major part of the asset’s useful life Existence of a bargain purchase option Present value of minimum lease payments is 50% of the fair value of the leased asset Transfer of ownership by end of lease term
Which of the following is not one of the criteria for determining whether a lease is a finance lease? A. The asset cost is greater than $100,000B. The lease grants the lessee an option to purchase the asset that the lessee is reasonably certain to exerciseC. The lease term is for the major part of the remaining economic life of the assetD. Alease that transdies ownership of the asset to the lessee by the end of the lease term
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 Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, 2025 Lessor's implicit rate Lessee's incremental borrowing rate Date 1/1/25 1/1/25 1/1/26 1/1/27 1/1/28 1/1/29 1/1/30 12/31/30 Lease payment (A) $97,312 $97,312 $97,312 $97,312 $97,312 $97,312 $5,000 January 1, 2025 $97,312 $24,806 $20,456 $15,845 $10,957 $5,775 $283 $55,000 $50,000 6 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. Table shows the amortization schedule for lessee for the lease term: $546,000 years years 6 % Interest expense (B = Prev D* 6%)…
The following facts pertain to a non-cancelable lease agreement between Sandhill Leasing Company and Carla Vista 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 Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, 2025 Lessor's implicit rate Lessee's incremental borrowing rate Click here to view factor tables. (a) Date 1/1/25 1/1/25 1/1/26 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. 1/1/27 1/1/28 1/1/29 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.) 1/1/30 12/31/30 $ $ Annual Lease Payment…
Explain which of following would result in the lessee classifying the lease as a finance lease. a. The lease is for a major part of the economic life of the asset. b. The lease term is for 12 months or less. c. The lease transfers ownership of the asset at the end of the lease.
The following facts pertain to a non-cancelable lease agreement between Wildhorse Leasing Company and Windsor Company, a lessee. Commencement date June 1, 2025 Annual lease payment beginning with June 1, 2025 $19,998.50 Bargain purchase option price at end of lease term $7,000.00 Lease term Economic life of leased equipment (no salvage value) Lessor's cost Fair value of asset at June 1, 2025 4 years 12 years $56,000 $78,999 Lessor's implicit rate (known to lessee) 6% Lessee's incremental borrowing rate 69 The collectibility of the lease payments by Wildhorse is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) (b) (c) Your answer is partially correct. Prepare a lease amortization schedule for Windsor for the 4-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) WINDSOR COMPANY (Lessee) Date 6/1/25 $ 6/1/25 6/1/26 6/1/27 6/1/28 5/31/29 Annual Lease Payment Plus BPO $ Lease…
Assume that the lease contract involved an identified leased equipment at a cost of $120,000 by the lessor. The term of the lease is 6 years beginning December 31, 2021, with equal rental payments of $30,044 beginning December 31, 2021. The fair value of the equipment at commencement of the lease is $150,001. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments is probable. Prepare the lessor's journal entries on December 31, 2021, at commencement of the lease. Show all your work for partial credits.
Each of the four independent situations below describes a lease requiring annual lease payments of $10,000. For each situation, determine the appropriate lease classification by the lessee and indicate why. Situations 1 2 3 4 Lease terms (years) 4 4 4 4 Asset's useful life (years) 6 5 6 6 Asset's fair value $ 44,000 $ 45,000 $ 41,000 $ 38,500 Purchase option that is reasonably certain to be exercised? No Yes No No Annual lease payments Beginning of Year End of Year Beginning of Year End of Year Lessor's implicit rate (known by lessee) 5% 6% 5% 6% Lesse's incremental borrowing rate 5% 5% 5% 5%