On January 1, 2017, Windsor Co. leased a building to Wildhorse Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,400,000 (unguaranteed). 2. The leased building has a cost of $3,900,000 and was purchased for cash on January 1, 2017. 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 4. Lease payments are $285,000 per year and are made at the beginning of the year. 5. Wildhorse has an incremental borrowing rate of 9%, and the rate implicit in the lease is unknown to Wildhorse. 6. Both the lessor and the lessee are on a calendar-year basis. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare the journal entries that Windsor should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Credit 1/1/17 12/31/17 (To record cost of the building) (To record receipt of lease payment) 1/1/17 (To record the recognition of the revenue each period) SHOW LIST OF ACCOUNTS 12/31/17 (To record depreciation expense on the leased asset) LINK TO TEXT LINK TO TEXT Prepare the journal entries that Wildhorse should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round Date Account Titles and Explanation Debit Credit 1/1/17 (To record the lease) (To record lease liability) SHOW LIST OF ACCOUNTS Debit LINK TO TEXT LINK TO TEXT If Wildhorse paid $40,000 to a real estate broker on January 1, 2017, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset?
On January 1, 2017, Windsor Co. leased a building to Wildhorse Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,400,000 (unguaranteed). 2. The leased building has a cost of $3,900,000 and was purchased for cash on January 1, 2017. 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 4. Lease payments are $285,000 per year and are made at the beginning of the year. 5. Wildhorse has an incremental borrowing rate of 9%, and the rate implicit in the lease is unknown to Wildhorse. 6. Both the lessor and the lessee are on a calendar-year basis. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare the journal entries that Windsor should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Credit 1/1/17 12/31/17 (To record cost of the building) (To record receipt of lease payment) 1/1/17 (To record the recognition of the revenue each period) SHOW LIST OF ACCOUNTS 12/31/17 (To record depreciation expense on the leased asset) LINK TO TEXT LINK TO TEXT Prepare the journal entries that Wildhorse should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round Date Account Titles and Explanation Debit Credit 1/1/17 (To record the lease) (To record lease liability) SHOW LIST OF ACCOUNTS Debit LINK TO TEXT LINK TO TEXT If Wildhorse paid $40,000 to a real estate broker on January 1, 2017, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject: acounting
Transcribed Image Text:On January 1, 2017, Windsor Co. leased a building to Wildhorse Inc. The relevant information related to the lease is as follows.
1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,400,000 (unguaranteed).
2.
The leased building has a cost of $3,900,000 and was purchased for cash on January 1, 2017.
The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value.
Lease payments are $285,000 per year and are made at the beginning of the year.
4.
5. Wildhorse has an incremental borrowing rate of 9%, and the rate implicit in the lease is unknown to Wildhorse.
6. Both the lessor and the lessee are on a calendar-year basis.
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Prepare the journal entries that Windsor should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Credit
Date Account Titles and Explanation
1/1/17
12/31/17
(To record cost of the building)
(To record receipt of lease payment)
1/1/17
(To record the recognition of the revenue each period)
SHOW LIST OF ACCOUNTS
12/31/17
(To record depreciation expense on the leased asset)
LINK TO TEXT LINK TO TEXT
Prepare the journal entries that Wildhorse should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
Date Account Titles and Explanation
Debit
Credit
1/1/17
(To record the lease)
(To record lease liability)
SHOW LIST OF ACCOUNTS
LINK TO TEXT LINK TO TEXT
Debit
If Wildhorse paid $40,000 to a real estate broker on January 1, 2017, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset?
Right-of-use asset $
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