Please give me correct answer this financial accounting question Lakeside Logistics Inc. entered into a seven-year capital lease on a distributioncenter on December 31, 2016. Lease payments of $25,000, which include realestate taxes of $1,200, are due annually, beginning on December 31, 2017, andevery December 31 thereafter. Lakeside does not know the interest rate implicitin the lease; Lakeside's incremental borrowing rate is 10%. The rounded presentvalue of an ordinary annuity for seven years at 10% is 4.8.What amount should Lakeside Logistics Inc. report as capitalized lease liabilityat December 31, 2016?

Step 1: Definition of Capitalized Lease LiabilityCapitalized lease liability represents the present…

Answered: Lakeside Logistics Inc. entered into a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 1P

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Neal Corp. entered into a nine-year capital lease on a warehouse on December 31, 2016. Lease payments of $52,000, which includes real estate taxes of $2,000, are due annually, beginning on December 31, 2017, and every December 31 thereafter. Neal does not know the interest rate implicit in the lease; Neal’s incremental borrowing rate is 9%. The rounded present value of an ordinary annuity for nine years at 9% is 6.0. What amount should Neal report as capitalized lease liability at December 31, 2016? a. $300,000 b. $312,000 c. $450,000 d. $468,000
At the beginning of the current year, Ashe Company entered into a ten-year noncancelable lease requiring year-end payments ofP1,000,000. Ashe’s incremental borrowing rate is 12%, while the lessor’s implicit interest rate, known to Ashe, is 10%. Present value factors for an ordinary annuity for ten periods are 6.145 at 10% and 5.650 at 12%. On the same date, Ashe Company paid the initial direct cost of P200,000 to negotiate and secure the leasing agreement. Ownership of the property remains to the lessor at the expiration of the lease. The leased property has an estimated economic life of 12 years. 1. What amount should be capitalized as cost of the Right to Use Asset?a. 6,145,000b. 6,345,000c. 5,650,000d. 5,850,000 2. What is the depreciation for the current year?a. 614,500b. 634,500c. 528,750d. 565,000 3. What is the lease liability at the end of the current year?a. 5,328,000b. 5,552,000c. 5,759,500d. 5,979,500
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Ivanhoe Company leases a machine from Vollmer Corp. under an agreement which meets the criteria to be a finance lease for Ivanhoe. The six-year lease requires payment of $172000 at the beginning of each year, including $25200 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 10%; the lessor’s implicit rate is 8% and is known by the lessee. The present value of an annuity due of 1 for six years at 10% is 4.79079. The present value of an annuity due of 1 for six years at 8% is 4.99271. Ivanhoe should record the leased asset at 824016 858746 732930 703288
Lessee Company enters into a lease on January 1, 2024, that is accounted for as a finance lease. The lease calls for quarterly payments of $20,000, beginning on January 1, 2024, and continuing for 5 years. The last payment is due on October 1, 2028. The lease has an implicit annual interest rate of 10%. The present value of an annuity due at 10% per period for 5 periods is 4.170; the present value of an annuity due at 2.50% per period for 20 periods is 15.979. What amount will Lessee report as a lease payable (not including accrued interest) in its balance sheet on December 31, 2024? Multiple Choice $416,987 $261,102 $319,580 $247,630 $416,987
On June 30, 2018, Georgia-Atlantic, Inc. leased a warehouse facility from IC Leasing Corporation. The leaseagreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year leaseterm, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic’s incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Depreciation is recordedon a straight-line basis at the end of each fiscal year. The fair value of the warehouse is $3 million.Required:1. Determine the present value of the lease payments at June 30, 2018 (to the nearest $000) that GeorgiaAtlantic uses to record the right-of-use asset and lease liability.2. What amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31,2018 (ignore taxes)?3. What amounts related to the lease would Georgia-Atlantic report in its income statement for the year endedDecember 31, 2018 (ignore taxes)?
On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease agreement qualifies as a finance lease and calls for Blue to make semiannual lease payments of $212,190 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue’s incremental borrowing rate is 10%, the same rate Big uses to calculate lease payment amounts. Determine the present value of the lease payments on June 30, 2024, that Blue uses to record the right-of-use asset and lease liability. What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2024? (Ignore taxes.) What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2024? (Ignore taxes.)
On January 2, 2021, Cullumber Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $172000 each, payable beginning January 2, 2021. Brick Co. agrees to guarantee the $174500 residual value of the asset at the end of the lease term. The expected value of the residual value is $62500. Brick’s incremental borrowing rate is 9%, however it knows that Cullumber’s implicit interest rate is 7%. What journal entry would Brick Co. make at January 2, 2021 to record the lease?
On January 2, 2021, Cullumber Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $161000 each, payable beginning January 2, 2021. Brick Co. agrees to guarantee the $158000 residual value of the asset at the end of the lease term. The expected value of the residual value is $57000. Brick’s incremental borrowing rate is 11%, however it knows that Cullumber’s implicit interest rate is 9%. What journal entry would Brick Co. make at January 1, 2022 to record the second lease payment?
On December 31, 2019, Lewis Corp. (Lewis), a publicly accountable entity, leased a tractor from Jade Leasing Corp. (JLC). The lease term is for seven years, after which the asset must be returned to JLC. The annual lease payments are $45,000, with the first payment due on December 31, 2019. The interest rate implicit in the lease is 6% and is known to Lewis. Lewis’s incremental borrowing rate is 5%. The guaranteed residual value of the tractor at the end of the lease term is $50,000, and Lewis expects that the tractor’s fair value when returned to JLC will be $30,000. Required: Prepare all journal entries required by Lewis for the tractor lease on December 31, 2019, and for the year ended December 31, 2020

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