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On December 31, 2024, Teal Mountain Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Teal Mountain to make annual payments of $8,634 at the beginning of each year, starting December 31, 2024. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Teal Mountain uses the straight-line method of depreciation for all of its plant assets. Teal Mountain's incremental borrowing rate is 8%, and the lessor's implicit rate is unknown. Click here to view factor tables. (a) Your answer is correct. What type of lease is this? (b) This is a/an finance lease. eTextbook and Media List of Accounts Your answer is correct. Attempts: unlimited Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places e.g. 5,275.) Present value of the lease payments 37231 (c) eTextbook and Media Solution Computation of present value of lease payments: $8,634 × 4.31213* = $37,231 *Present value of an annuity due of 1 for 5 periods at 8%. List of Accounts Assistance Used Assistance Used Attempts: unlimited Prepare all necessary journal entries for Teal Mountain for this lease through December 31, 2025. (List all debit entries before credit entries. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount i entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Date Account Titles and Explanation 12/31/24 (To record the lease) 12/31/25 (To record first lease payment) (To record amortization of the right-of-use asset) (To record lease payment) Debit Cre

On December 31, 2024, Teal Mountain Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Teal Mountain to make annual payments of $8,634 at the beginning of each year, starting December 31, 2024. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Teal Mountain uses the straight-line method of depreciation for all of its plant assets. Teal Mountain's incremental borrowing rate is 8%, and the lessor's implicit rate is unknown. Click here to view factor tables. (a) Your answer is correct. What type of lease is this? (b) This is a/an finance lease. eTextbook and Media List of Accounts Your answer is correct. Attempts: unlimited Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places e.g. 5,275.) Present value of the lease payments 37231 (c) eTextbook and Media Solution Computation of present value of lease payments: $8,634 × 4.31213* = $37,231 *Present value of an annuity due of 1 for 5 periods at 8%. List of Accounts Assistance Used Assistance Used Attempts: unlimited Prepare all necessary journal entries for Teal Mountain for this lease through December 31, 2025. (List all debit entries before credit entries. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount i entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Date Account Titles and Explanation 12/31/24 (To record the lease) 12/31/25 (To record first lease payment) (To record amortization of the right-of-use asset) (To record lease payment) Debit Cre

Intermediate Accounting: Reporting And Analysis
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 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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On December 31, 2024, Teal Mountain Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Teal Mountain to make annual payments of $8,634 at the beginning of each year, starting December 31, 2024. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Teal Mountain uses the straight-line method of depreciation for all of its plant assets. Teal Mountain's incremental borrowing rate is 8%, and the lessor's implicit rate is unknown. Click here to view factor tables. (a) Your answer is correct. What type of lease is this? (b) This is a/an finance lease. eTextbook and Media List of Accounts Your answer is correct. Attempts: unlimited Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places e.g. 5,275.) Present value of the lease payments 37231 (c) eTextbook and Media Solution Computation of present value of lease payments: $8,634 × 4.31213* = $37,231 *Present value of an annuity due of 1 for 5 periods at 8%. List of Accounts Assistance Used Assistance Used Attempts: unlimited Prepare all necessary journal entries for Teal Mountain for this lease through December 31, 2025. (List all debit entries before credit entries. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount i entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Date Account Titles and Explanation 12/31/24 (To record the lease) 12/31/25 (To record first lease payment) (To record amortization of the right-of-use asset) (To record lease payment) Debit Cre
Transcribed Image Text:On December 31, 2024, Teal Mountain Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Teal Mountain to make annual payments of $8,634 at the beginning of each year, starting December 31, 2024. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Teal Mountain uses the straight-line method of depreciation for all of its plant assets. Teal Mountain's incremental borrowing rate is 8%, and the lessor's implicit rate is unknown. Click here to view factor tables. (a) Your answer is correct. What type of lease is this? (b) This is a/an finance lease. eTextbook and Media List of Accounts Your answer is correct. Attempts: unlimited Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places e.g. 5,275.) Present value of the lease payments 37231 (c) eTextbook and Media Solution Computation of present value of lease payments: $8,634 × 4.31213* = $37,231 *Present value of an annuity due of 1 for 5 periods at 8%. List of Accounts Assistance Used Assistance Used Attempts: unlimited Prepare all necessary journal entries for Teal Mountain for this lease through December 31, 2025. (List all debit entries before credit entries. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount i entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Date Account Titles and Explanation 12/31/24 (To record the lease) 12/31/25 (To record first lease payment) (To record amortization of the right-of-use asset) (To record lease payment) Debit Cre
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