Current Attempt in ProgressWindsor Leasing Group signs an agreement on January 1, 2022, to lease equipment to Cole plc. The following information relates tothis agreement.1.The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economiclife of 6years.2.The cost of the asset to the lessor is £275,000. The fair value of the asset at January 1, 2022, is £275,000.3.The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of£24,335, none of which is guaranteed.4.The agreement requires equal annual rental payments, beginning on January 1, 2022.5.Collectibility of the lease payments by Windsor is probable.Click here to view factor tables.(a)Assuming the lessor desires an 8% rate of return on its investment, calculate the amount of the annual rental payment required.(For calculation purposes, use 5 decimal places as displayed in the factor table provided and the final answer to O decimal places eg.5,275.)Amount of the annual rental payment

This is used in case of a future annuity – suppose an equal sum of money is invested in the bank on…

Answered: ndsor Leasing Group signs an agreement…

Business

Accounting

ndsor Leasing Group signs an agreement on January 1, 2 = agreement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

1- Oman Construction Leasing Company SAOG (OCLC), a subsidiary of Muscat Grant Corporation signed a lease agreement with Muscat Mist Infustructure Companyon January 2020. The leasing company will provide drilling equipment according to following conditions: The term of lease is up to December 2023. The Lease agreement is non-cancelable and requiring equal rental payment of 200,000 OMR at the beginning of each year (Annuity due basis). Muscat Mist has approval for renewal before maturity for two times. The equipment has a fair value at the time of Lease Agreement was around OMR 980000OMR and an economic life of 2 years and no residual value.Muscat Mist pays all the executory costs directly to the third party except for the property tax of OMR 1500 per year which is included as a part of its annual payment to OOLC.Muscat MistInfustructure incremental borrowing rate is 12% per year.Muscat Mist depreciates similar equipment that it owns at a straight ling method depreciation.The targeted…
Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sandhill Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $66.999 beginning on December 31, 2024. 2. The fair value of the building on December 31, 2024, is $490,629. 3. 4. 5. The building has an estimated economic life of 12 years, a guaranteed residual value of $11,000, and an expected residual value of $8,100. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided) (a) Your answer is partially correct. Prepare the journal…
Ww.227.
Figy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000 was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000 each. The rate implicit in the lease is 10%. Figy Co incurred initial direct costs of X2 to set up the lease. Required: 1. Give your own X2 then calculate the cost of the right-of-use asset as at 1 January 20X5? 2. What is the carrying amount of the lease liability at 31 December 20X6? 3. What amount will be charged to the statement of profit or loss in respect of this asset for the year ended at 31 December 20X6? 4. Prepare necessary accounting entries related to this lease agreement for the year ended at 31 December 20X5.
JK Ltd enters into a non-cancellable five-year lease agreement with Burt Ltd on 1 July 2019. The lease is for an item of machinery that, at the inception of the lease, has a fair value of $647,192. The machinery is expected to have an economic life of six years, after which time it will have an expected residual value of $105,000. There is a bargain purchase option that JK Ltd will be able to exercise at the end of the fifth year for $140,000. There are to be five annual payments of $175,000, the first being made on 30 June 2020. Included with $175,000 lease payments is an amount of $17,500 representing payment to the lessor for the insurance maintenance of the equipment. The equipment is to be depreciated on a straight-line basis. a. Determine the rate of interest implicit in the lease and calculate the present value of the lease payments. b. Prepare the journal entries in the books of JK Ltd for the years ending 30 June 2020 and 30 June 2021. c. Prepare the portion of the statement…
1. 2. The lessee makes a lease payment of $75,200 to the lessor for equipment in an operating lease transaction. Wildhorse Company leases equipment from Noble Construction Inc. The present value of the lease payments is $658,000. The lease qualifies as a capital lease.. Prepare the journal entries that the lessee should make to record the above transactions assuming the entities report under ASPE. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles 1. Debit Credit
am. 90.
In accounting for lease contracts, companies reporting under U.S. GAAP are required to treat the cash payments as "rent expense" if the contract is for 24 months or less. O do not need to capitalize the leased right-to-use asset if the contract is deemed immaterial. O have the discretion to classify the cash payments as "rent expense". O have to disclose every detail of the contract in the footnotes to the financial statements.
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pharoah Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 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, Lessor's implicit rate Lessee's incremental borrowing rate January 1, $126,840 $55,000 $50,000 6 years 6 years $653,000 9 % 9 % 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.
he following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Ivanhoe Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $99,118 Residual value of equipment at end of lease term, guaranteed by the lessee $53,000 Expected residual value of equipment at end of lease term $48,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $554,000 Lessor’s implicit rate 6 % Lessee’s incremental borrowing rate 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.Click here to view factor tables. (a) Your answer is partially correct. Try again. Prepare an amortization schedule that would be suitable for the lessee for the lease term.…
On January 1, year 1, Cenron Systems Ltd. (CSL) assigned a contract to lease computer equipment from Dell for three years. The lease agreement requires CSL to pay $45,000 at the end of each year of the lease. The company´s borrowing rate is 6.5%. Under U.S. GAAP, the lease would be classified as operating. However, CSL is based in Singapore and will account for the lease using IFRS 16. a) Compute the value of the lease liability that CSL will record under IFRS 16 on January 1, Year 1: b) In each year of the lease, CSL will record depreciation expense on the leasehold asset and interest expense on the lease obligation. Compute the amount of the two expenses in the lease´s first year: c) CSL is partially backed by U.S. venture capital fund that would like to know how the lease would be accounted for under U.S. GAAP. How much expense would CSL recognize for the lease if it were a U.S. company during the first year?: please explain!
Determining Amounts in Operating Lease-Lessee Kulver's Inc. leases equipment from Equip Inc. on January 1 under a 3-year operating lease. Kulver's agrees to pay Equip Inc. $15,000 annually with the first payment due on January 1. As an incentive for Kulver's to sign the lease by January 1, Equip Inc. paid Kulver's Inc. $700. Kulver's also incurred legal fees for the review of the lease agreement ($200) and salaries for employees involved in negotiating the lease ($1,300). Assuming an incremental borrowing rate of 7% for Kulver's Inc., determine the value of the lease liability and the right-of- use asset on January 1 for Kulver's. Note: Round your answers to the nearest whole dollar. Lease liability $ 11,620 X Right-of-use asset $ 41,620✔ Check