On January 1, 2022, Ivanhoe Inc., a construction company, leased an excavator from Oriole Inc. The lease terms are as follows: Annual lease payments of $26.900 at the beginning of each year for five years At the end of the lease term the asset reverts back to the lessor and the residual value guarantee is $8.100 The incremental borrowing rate is 7% and the implicit rate in the lease is 6% (known by the lessee) Ivanhoe Inc. has a December 31 year end . . . Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
On January 1, 2022, Ivanhoe Inc., a construction company, leased an excavator from Oriole Inc. The lease terms are as follows: Annual lease payments of $26.900 at the beginning of each year for five years At the end of the lease term the asset reverts back to the lessor and the residual value guarantee is $8.100 The incremental borrowing rate is 7% and the implicit rate in the lease is 6% (known by the lessee) Ivanhoe Inc. has a December 31 year end . . . Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 1P
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![On January 1, 2022, Ivanhoe Inc., a construction company, leased an excavator from Oriole inc. The lease terms are as follows:
Annual lease payments of $26.900 at the beginning of each year for five years
At the end of the lease term the asset reverts back to the lessor and the residual value guarantee is $8.100
The incremental borrowing rate is 7% and the implicit rate in the lease is 6% (known by the lessee)
Ivanhoe Inc. has a December 31 year end
•
•
.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
Prepare the journal entries for 2022 for Ivanhoe Inc. Assume Ivanhoe Inc. follows IFRS. (List all debit entries before credit entries. Credit
account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.
Round factor values to 5 decimal places, e.g. 1.25124. If no entry is required, select "No entry" for the account titles and enter O for the
amounts)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c1b79bd-ec90-48fd-be7a-92b723031db9%2F798feae1-e58f-466d-9c80-094f77c2a118%2F8rnuyn7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2022, Ivanhoe Inc., a construction company, leased an excavator from Oriole inc. The lease terms are as follows:
Annual lease payments of $26.900 at the beginning of each year for five years
At the end of the lease term the asset reverts back to the lessor and the residual value guarantee is $8.100
The incremental borrowing rate is 7% and the implicit rate in the lease is 6% (known by the lessee)
Ivanhoe Inc. has a December 31 year end
•
•
.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
Prepare the journal entries for 2022 for Ivanhoe Inc. Assume Ivanhoe Inc. follows IFRS. (List all debit entries before credit entries. Credit
account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.
Round factor values to 5 decimal places, e.g. 1.25124. If no entry is required, select "No entry" for the account titles and enter O for the
amounts)
![Date
L1.2022
31, 2022
31.2022
Account Titles and Explanation
Right-of-Use Asset
Lease Liability
Cash
Accumulated Depreciation Right-of Use Asset
Right-of-Use Asset
(To record depreciation)
Interest Expense
Lease Liability
(To record interest)
Interest Expense
Debit
120111
22402
5593
Credit
93211
26900
22402
100
5592](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c1b79bd-ec90-48fd-be7a-92b723031db9%2F798feae1-e58f-466d-9c80-094f77c2a118%2Fg47wqxj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Date
L1.2022
31, 2022
31.2022
Account Titles and Explanation
Right-of-Use Asset
Lease Liability
Cash
Accumulated Depreciation Right-of Use Asset
Right-of-Use Asset
(To record depreciation)
Interest Expense
Lease Liability
(To record interest)
Interest Expense
Debit
120111
22402
5593
Credit
93211
26900
22402
100
5592
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