On July 1, 2019, an entity leased an equipment to a lessee under a 3-year operating lease. Total rent for the lease term is P3,600,000, payable P50,000 monthly for the first lease year, P75,000 monthly for the second lease year and P175,000 monthly for the third lease year. All payments were made when due. On June 30, 2021, what amount should be reported as accrued rent receivable? a. 2,100,000 b. 1,200,000 c. 900,000 d. 0

On July 1, 2019, an entity leased an equipment to a lessee under a 3-year operating lease. Total rent for the lease term is P3,600,000, payable P50,000 monthly for the first lease year, P75,000 monthly for the second lease year and P175,000 monthly for the third lease year. All payments were made when due. On June 30, 2021, what amount should be reported as accrued rent receivable? a. 2,100,000 b. 1,200,000 c. 900,000 d. 0

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

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6P

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Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of 20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is 68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Executory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020.
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On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
17. On July 1, 2021, an entity leased an equipment to a lessee under a 3-year operating lease. Total rent for the lease term is P3,600,000, payable P50,000 monthly for the first lease year, P70,000 monthly for the second lease year and P180,000 monthly for the third lease year. All payments were made when due. On June 30, 2023, what amount should be reported as accrued rent receivable?
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On January 1, 2019, Inside Company purchased equipment. On the same date, Inside Company leased the equipment to another entity under an operating lease. The lease term is for 5 years with the following rental payments in advance:January 1, 2019 1,000,000January 1, 2020 1,000,000January 1, 2021 1,400,000January 1, 2022 1,700,000January 1, 2023 1,900,000 What is the gross rental income for the year ended December 31, 2019?1,000,0001,400,0001,400,0001,700,000
ABC Company leases a machinery from XYZ Company under a twelve-month operating lease. As an inducement to enter the lease, XYZ Company grants ABC free rent for the first two months. The lease is effective September 1, 2020 and provides for monthly rental of P12,000 to begin on November 1, 2020. 1.Compute for the rent expense for 2021 2.Determine the total net income to be recognized by the Lessor for the year 2020 as a result of this lease.
On January 1, 2020 an entity entered into a lease for commercial space with the following information: Annual rental payable at the end of each year P200,000; Lease term for 5 years; Implicit rate in the lease for 9%. On January 1, 2022, the entity and the lessor agreed to amend the original lease by extending the lease by 3 more years with the following information: Annual rental payable at end of each year beginning December 31, 2022 for P200,000 and an implicit rate in the lease for 11%. What is the carrying value of the right of use asset on December 31, 2022? a. 806,658 b. 466,800 c. 672,215 d. 622,400
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