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 period2 years$112,080Lease termQuarterly rental paymentsEconomic life of assetFair value of asset8%Implicit interest rate(Also lessee's incremental borrowing rate)Required:Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the inception offthe lease through January 1, 2012. Depreciation is recorded at the end of each financial year (December 31) on astraight-line basis.

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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 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 Manufacturers Southern from the inception of

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 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 Manufacturers Southern from the inception of

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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On January 2, 2021, Maroon Co., a dealer of machines, leased a machine to Green Co. Data relating to the lease are as follows: • Useful life of the equipment: 5 years • Lease term: 5 years Annual rent payable at the end of the year: P500,000 • Interest rate implicit in the lease: 10% Unguaranteed residual value: P150,000 • Initial direct cost: P20,000 The lease reverts to Maroon Co. at the end of the lease term. Note: Round-off present value factors to four decimal places. Round-off cents to peso. How much is the total interest income to be earned over the lease term?
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Terms of a lease agreement and related facts were: a. Incremental costs of commissions for brokering the lease and consummating the completed lease transaction incurred by the lessor were $5,408. b. The retail cash selling price of the leased asset was $425,000. Its useful life was three years with no residual value. c. The lease term is three years and the lessor paid $425,000 to acquire the asset. d. Annual lease payments at the beginning of each year were $160,000. e. Lessor's implicit rate when calculating annual rental payments was 13%. (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. Prepare the appropriate entries for the lessor to record the lease and related payments at its beginning, January 1, 2018. 2. Calculate the effective rate of interest revenue after adjusting the net investment by initial direct costs. 3. Record any entry(s) necessary at December 31, 2018, the fiscal year-end.…
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