On December 31, 2021, Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year period ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone- Metro. The equipment cost Rhone-Metro $300,000 and has an expected useful life of six years. Its normal sales price is $365,760. The lessee- expected residual value on December 31, 2025, is $25,000. It is not guaranteed. Equal payments under the lease are $104,000 (including 4,000 maintenance cost) and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya's incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation. DO NOT USE PV TABLE !! USE A FINANCIAL CALCULATOR !! 1.) Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2021. DO NOT USE PV TABLE !! USE A FINANCIAL CALCULATOR !!

On December 31, 2021, Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year period ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone- Metro. The equipment cost Rhone-Metro $300,000 and has an expected useful life of six years. Its normal sales price is $365,760. The lessee- expected residual value on December 31, 2025, is $25,000. It is not guaranteed. Equal payments under the lease are $104,000 (including 4,000 maintenance cost) and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya's incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation. DO NOT USE PV TABLE !! USE A FINANCIAL CALCULATOR !! 1.) Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2021. DO NOT USE PV TABLE !! USE A FINANCIAL CALCULATOR !!

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

Which of the following is not a dimension of designquality?A. CustomizationB. ServiceabilityC. DurabilityD. Feature
This is not in proper format
Which of the following is NOT a characteristic of effective information? a. relevance b. accuracy c. summarization d. precision
Please show how IRR was being calculated. Excel is not helping because doesn't show how the IRR is calculated.
help please, the answers I put are not correct
The inputs to a model may have different roles. Among the choices, which should be excluded? Choices: A.decision variables B.intermediate calculation C.No choice given D.conversion factors E.historical data
What is Contiguous data?
What exactly are reversing entries, and why do they exist?
Types of gap and give example with interpretation.