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P21.8 (LO 2, 4) (Lessee Computations and Entries, Lease with Guaranteed Residual Value) Assume the same data as in P21.7 and that Chambers Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of R$10,000. Instructions a. Compute the amount of the initial lease liability. b. Prepare a 1o-year lease amortization schedule. c. Prepare all of the lessee's journal entries for the first year. d. Suppose Chambers Medical Center incurred R$7,000 of document preparation costs after the execution of the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?

P21.8 (LO 2, 4) (Lessee Computations and Entries, Lease with Guaranteed Residual Value) Assume the same data as in P21.7 and that Chambers Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of R$10,000. Instructions a. Compute the amount of the initial lease liability. b. Prepare a 1o-year lease amortization schedule. c. Prepare all of the lessee's journal entries for the first year. d. Suppose Chambers Medical Center incurred R$7,000 of document preparation costs after the execution of the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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P21-8. Please answer P21-8, part a,c,d. Note that in part (d), they ask for both LEASE LIABILITY and RIGHT OF USE ASSET. Please show all workings clearly. 

P21.8 (LO 2, 4) (Lessee Computations and Entries, Lease with Guaranteed Residual Value) Assume the same data as in P21.7 and that Chambers Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of R$10,000. Instructions a. Compute the amount of the initial lease liability. b. Prepare a 1o-year lease amortization schedule. c. Prepare all of the lessee's journal entries for the first year. d. Suppose Chambers Medical Center incurred R$7,000 of document preparation costs after the execution of the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?
Transcribed Image Text:P21.8 (LO 2, 4) (Lessee Computations and Entries, Lease with Guaranteed Residual Value) Assume the same data as in P21.7 and that Chambers Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of R$10,000. Instructions a. Compute the amount of the initial lease liability. b. Prepare a 1o-year lease amortization schedule. c. Prepare all of the lessee's journal entries for the first year. d. Suppose Chambers Medical Center incurred R$7,000 of document preparation costs after the execution of the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?
P21.7 (LQ3) (Lessor Computations and Entries, Sales-Type Lease with Guaranteed Residual Value) Amirante SA manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is R$495,678, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be R$15,000. The hospital will pay rents of R$60,000 at the beginning of each year. Amirante incurred R$3o00,000 in manufacturing costs and R$14,000 in legal fees directly related to the signing of the lease. Amirante has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%.
Transcribed Image Text:P21.7 (LQ3) (Lessor Computations and Entries, Sales-Type Lease with Guaranteed Residual Value) Amirante SA manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is R$495,678, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be R$15,000. The hospital will pay rents of R$60,000 at the beginning of each year. Amirante incurred R$3o00,000 in manufacturing costs and R$14,000 in legal fees directly related to the signing of the lease. Amirante has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%.
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