Oriole Ltd., a public company following IFRS, recently signed a lease for equipment from Costner Ltd. The lease term is 7 years andrequires equal rental payments of $19,049 at the beginning of each year. The equipment has a fair value at the lease's inception of$104,500, an estimated useful life of 7 years, and no residual value. Oriole pays all executory costs directly to third parties. Theappropriate interest rate is 9%.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.Using tables, a financial calculator, or Excel functions, calculate the amount of the right-of-use asset and lease liability. Prepare theinitial entry to reflect the signing of the lease agreement and the first payment under the lease. (List all debit entries before credit entries.Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places,e.g. 5,275.)Account Titles and ExplanationDebitCredit

The objective of the question is to calculate the amount of the right-of-use asset and lease…

Answered: Oriole Ltd., a public company following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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AC3220 Corp., who reports under ASPE, leases computer equipment on January 1, 2023, and records this as a capital lease. Three annual lease payments of $10,000 are required the beginning of each year, starting January 1, 2023. The interest rate for the lease 10%. Title passes to AC3220 at the end of the lease. AC3220 uses the effective interest method of amortization for the lease. The company uses straight-line depreciation over the equipment's expected useful life of three years, with no residual value. Instructions (Round values to the nearest dollar.) a) Calculate the present value of the lease payments b) Prepare a lease amortization table for 2023, 2024, and 2025. c) Prepare the general journal entries relating to this lease for 2023. Paragraph ✓ Date BI UA + v ... Beginning Balance Payment Interest Expense Lease Amortization Ending Balance 11.
Alfredo Ltd (lessor) entered into an agreement on 1 July 2022 to lease a processing plant to Fatimah Ltd (lessee). Alfredo considers this lease contract as a manufacturer-type lease. The cost of the plant to Alfredo is $85411. The terms of the lease agreement were: Lease term: 3 years; Economic life of plant: 5 years; • Annual rental payment, in arrears (commencing 30/6/2020): $165,000; Residual value guaranteed by Fatimah Ltd: $60,000; Interest rate implicit in the lease: 8%; •The lease is cancellable, but only with the permission of the lessor; and At the end of the lease term, the plant is to be returned to Alfredo Ltd. In setting up the lease agreement, Alfredo Ltd incurred $9851 in legal fees and stamp duty costs. The annual rental payment of $165,000 includes $15,000 to reimburse Alfredo Ltd for maintenance costs incurred on behalf of Fatimah Ltd. The net profit recognised by Alfredo on 1 July 2022 on the day of the lease inception is? PLEASE ENTER YOUR ANSWER IN WHOLE NUMBERS NO…
Whispering Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $54,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%; Whispering’s incremental borrowing rate is 8%. Whispering is unaware of the rate being used by the lessor. At the end of the lease, Whispering has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Whispering uses the straight-line method of depreciation on similar owned equipment.
C
Blue Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $57,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Blue’s incremental borrowing rate is 9%. Blue is unaware of the rate being used by the lessor. At the end of the lease, Blue has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Blue uses the straight-line method of depreciation on similar owned equipment.Click here to view factor tables. (a) Prepare the journal entries, that Blue should record on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.…
Metlock Company leases a building and land. The lease term is 8 years and the annual fixed payments are $840,000. The lease arrangement gives Metlock the right to purchase the building and land for $13,550,000 at the end of the lease. Based on an economic analysis of the lease at the commencement date, Metlock is reasonably certain that the fair value of the leased assets at the end of lease term will be much higher than $13,550,000. What are the total lease payments in this lease arrangement? Total lease payments Click if you would like to Show Work for this question: Open Show Work
Sheffield Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Sheffield's incremental borrowing rate is 9%. Sheffield is unaware of the rate being used by the lessor. At the end of the lease, Sheffield has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Sheffield uses the straight-line method of depreciation on similar owned equipment. Click here to view factor tables.
Davidson, Incorporated leased a machine from Barwick Corporation. Barwick completed construction of the machine on January 1, 2024. The lease agreement for the $16,000,000 (fair value and present value of the lease payments) machine specified 4 equal payments at the end of each year. The useful life of the machine was expected to be 4 years with no residual value. Barwick's implicit interest rate was 9%. Lease date Fair value and present value of lease payments Lease term Useful life of machine Residual value Barwick's implicit interest rate 1. Determine the amount of each lease payment using Excel's PMT function 3. Prepare an amortization schedule for the 4-year term of the lease. Date 2. Prepare the journal entry for Davidson, Incorporated at the beginning of the lease on January 1, 2024. Date General Journal Debit January ,2024 January 1, 2024 December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 Totals 4. Record the first lease payment on December 31, 2024. Date…
Wildhorse, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $434152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Wildhorse, Inc.’s incremental borrowing rate is 9% and the rate implicit in the lease (which is known by Wildhorse, Inc.) is 7%. Wildhorse, Inc. uses the straight-line method to amortize similar assets. What is the amount of amortization expense recorded by Wildhorse, Inc. in the first year of the asset’s life? PV Annuity Due PV Ordinary Annuity 7%, 4 periods 3.62432 3.38721 9%, 4 periods 3.53129 3.23972 ANSWER CHOICES: 0 because the asset is amortized by Wildhorse Company $383279 $367641 $393377
Wilcox Ltd finance company purchases a machine for $160,000 at the request of Upland Manufacturing Ltd, which then leases it to Upland for $60,000 per annum for three years. The payments are to be made at the commencement of each year including the first year of the lease period. Wilcox Ltd incurs costs of $1,500 to establish the lease. The lease is non-cancellable and classified as a finance lease by the lessor. The interest rate implicit in the lease is 10%. There is no guaranteed or unguaranteed residual value at the end of the lease period. Required: Prepare the journal entries for Wilcox Ltd to record the initial recognition of lease related assets and interest income for three years under AASB 16/IFRS 16
Whispering Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $54,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%; Whispering’s incremental borrowing rate is 8%. Whispering is unaware of the rate being used by the lessor. At the end of the lease, Whispering has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Whispering uses the straight-line method of depreciation on similar owned equipment.
Skysong Dairy leases its milking equipment from Concord Finance Company under the following lease terms. 1. The lease term is 10 years, noncancelable, and requires equal rental payments of $32,500 due at the beginning of each year starting January 1, 2020. 2. The equipment has a fair value at the commencement of the lease (January 1, 2020) of $244,649 and a cost of $267,000 on Concord Finance’s books. It also has an estimated economic life of 15 years and an expected residual value of $15,300, though Skysong Dairy has guaranteed a residual value of $19,700 to Concord Finance. 3. The lease contains no renewal options, and the equipment reverts to Concord Finance upon termination of the lease. The equipment is not of a specialized use. 4. Skysong Dairy’s incremental borrowing rate is 8% per year. The implicit rate is also 8%. 5. Skysong Dairy depreciates similar equipment that it owns on a straight-line basis. 6. Collectibility of the payments is probable. A)…

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