On January 1, 2015, Traylor Company, an 80%-owned subsidiary of Parker Electronics, Inc., signed a 4-year directfinancing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1 of each year, and title transfers to Traylor on January 1, 2019. The equipment originally cost $40,822 and had an estimated remaining life of five years at the start of the lease term. The lessor’s implicit interest rate is 12%. The lessee also used the 12% rate to record the transaction. Question: Prepare the eliminations and adjustments required for this lease on the December 31, 2015, consolidated worksheet.
On January 1, 2015, Traylor Company, an 80%-owned subsidiary of Parker Electronics, Inc., signed a 4-year directfinancing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1 of each year, and title transfers to Traylor on January 1, 2019. The equipment originally cost $40,822 and had an estimated remaining life of five years at the start of the lease term. The lessor’s implicit interest rate is 12%. The lessee also used the 12% rate to record the transaction. Question: Prepare the eliminations and adjustments required for this lease on the December 31, 2015, consolidated worksheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2015, Traylor Company, an 80%-owned subsidiary of Parker Electronics, Inc., signed a 4-year directfinancing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1 of each year, and title transfers to Traylor on January 1, 2019. The equipment originally cost $40,822 and had an estimated remaining life of five years at the start of the lease term. The lessor’s implicit interest rate is 12%. The lessee also used the 12% rate to record the transaction.
Question: Prepare the eliminations and adjustments required for this lease on the December 31, 2015, consolidated worksheet.
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