On January 1, 2020, Gold Company entered into a 5-yearlease of a floor of a building with the following terms:Annual rental for the first two years payableat the end of each yearAnnual rental for the next three years payableat the end of each yearInitial direct cost paid by lesseeLeasehold improvementPresent value of restoration cost required by contractUseful life of buildingImplicit interest rateDiscount rate for the restoration cost200,000300,000100,000250,00050,00020 years8%5%1.7832.577PV of an ordinary annuity of 1 at 8% for two periodsPV of an ordinary annuity of 1 at 8% for three periodsPV of 1 at 8% for two periods0.857Required:1 Compute the lease liability on January 1, 2020.2. Compute the cost of right of use asset.3. Compute the depreciation for 2020.4. Prepare a table of amortization.5. Prepare journal entries for 2020.6. Prepare the journal entry for the lease payment onDecember 31, 2022.

Name: On January 1, 2020, Gold Company entered into a 5-yearlease of a floo
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: On January 1, 2020, Gold Company entered into a 5-yearlease of a floor of a building with the following terms:Annual rental for the first two years payableat the end of each yearAnnual rental for the next three years payableat the end of each yearIn

Disclaimer: “Since you have posted a question with multiple sub-parts, we will solve first three…

Business

Accounting

On January 1, 2020, Gold Company entered into a 5-year lease of a floor of a building with the following terms: Annual rental for the first two years payable at the end ofeach year Annual rental for the next three years payable at the end of each year Initial direct cost paid by lessee Leasehold improvement Present value of restoration cost required by contract Useful life of building Implicit interest rate Discount rate for the restoration cost PV of an ordinary annuity of 1 at 8% for two periods PV of an ordinary annuity of 1 at 8% for three periods PV of 1 at 8% for two periods 200,000 300,000 100,000 250,000 50,000 20 years 8% 5% 1.783 2.577 0.857 Required: 1 Compute the lease liability on January 1, 2020. 2. Compute the cost of right of use asset. 3. Compute the depreciation for 2020.

On January 1, 2020, Gold Company entered into a 5-year lease of a floor of a building with the following terms: Annual rental for the first two years payable at the end ofeach year Annual rental for the next three years payable at the end of each year Initial direct cost paid by lessee Leasehold improvement Present value of restoration cost required by contract Useful life of building Implicit interest rate Discount rate for the restoration cost PV of an ordinary annuity of 1 at 8% for two periods PV of an ordinary annuity of 1 at 8% for three periods PV of 1 at 8% for two periods 200,000 300,000 100,000 250,000 50,000 20 years 8% 5% 1.783 2.577 0.857 Required: 1 Compute the lease liability on January 1, 2020. 2. Compute the cost of right of use asset. 3. Compute the depreciation for 2020.

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

On January 1, 20X0, an entity leased an equipment for four years at an annual rental of $170,000 payable at the end of each year. The estimated useful life of the equipment is four years. The present value factor of an ordinary annuity of 1 for four years of an implicit rate of 12% is 3.0373. The lease provides for a transfer of ownership of the equipment to the lessee at the end of the lease term. Compute for the depreciation expense for the right of use of asset for the year ended December 31, 20x0.
Lessee enters into a three year lease of equipment and agrees to make the following annual payments at the end of each year 10,000 in year one, 12,000 in year two and 14,000 in year three. Discount rate is approx. 4, 235% and right of use asset is depreciated on a straight line basis over the lease term. What is the value of the lease liability at the end of years 2 & 3?
On December 31, 2020, Roe Company leased a machine from Colt Company for a five-year period Equal annual payments under the lease P1,050,000 including P50,000 annual executory cost and are due on December 31 of each year. The first payment was made on December 31, 2020, and the second payment was made on December 31, 2021. The five lease payments are discounted at 10% over the lease term. The present value of minimum lease payments at the inception of the lease and before the first annual payment was P4,170.000.On December 31, 2021, what amount should be reported as lease liability?
On July 1, 2020 an entity entered into an 8-year lease of a floor of a building with the following terms: Annual rental for the first three years payable at the end of each year 300,000 Annual rental for the next five years payable at the end of 400,000 each year Implicit interest rate 10% Compute the balance of lease liability on December 31, 2020. (Use four decimal places for your present value ex:1.3284) O 1,773,408 O 1,884,916 O 1,138,816 O 1,829,152
On January 1, 2024, Blue Co. recorded a right-of-use asset of $869,628 in a 10-year operating lease. The lease calls for ten annual payments of $120,000 at the beginning of each year. The interest rate charged by the lessor was 8%. What amount will Blue Co. record for amortization expense on December 31, 2024? O $60,030 O $64,832 O $86,963 $59,970 ring
On December 31, 2020, Brick Co. leases Equipment to House, Inc. Annual Lease Payments made at beginning of Lease year $159,000 Implicit rate Guaranteed Residual Value Expected Residual Value Present value of an annuity due (7%,5) Present value of an ordinary annuity (7%,5) Present value of a single sum (7%,5) 7% $155,500 $56,500 4.38721 4.10020 0.71299 What journal entry would House, Inc. make at December 31, 2020 to record the lease assuming this is a finance lease? O DR Right of Use Asset $768,152; CR Lease Liability $768,152 O DR Right of Use Asset $808,426; CR Lease Liability $808,436 O DR Right of Use Asset $737,850; CR Lease Liability $737,850 O DR Right of Use Asset $626,980; CR Lease Liability $626,980
The table shows the new table of amortization from 2023 to 2029. Please help me understand where the 3,312,548 came from? what is the calculation? thank you
North Blue Company leased a new copier from Kixko Company on June 1, 2019, under a lease with the following information: Lease term 10 years Annual rental payable at the beginning of each lease year $45,000 Useful Life of machine 10 years Implicit interest rate 12% Present value factor for an annuity of 1 in advance for 10 periods at 12% 6.3282 Present Value factor for 1 for 10 periods at 12% 0.32197 North Blue has the option to purchase a machine on June 1, 2023, by paying $75,000, which approximates the fair value of the machine on the option exercise date. On May 1, 2019, North Blue should record a right-of-use asset in the amount of a.$284,769. b.$292,991. c.$450,000. d.$276,548.
WHAT IS THE INCREASE IN LEASE LIABILITY?
A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $150,000. Required: Prepare a partial amortization table up to the October 1 payment. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1?
Please kindly answer. Thankyou