P21-6 (L02,4) (Lessee Entries with Residual Value) The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Inception date Annual lease payment due at the beginning of January 1, 2017 each year, beginning with January 1, 2017 $124,798 Residual value of equipment at end of lease term, guaranteed by the lessee Lease term Economic life of leased equipment Fair value of asset at January 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $50,000 6 years 6 years $600,000 12% 12% The lessee assumes responsibility for all executory costs, which are expected to amount to $5,000 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $50,000. The lessee uses the straight- line depreciation method for all equipment.

P21-6 (L02,4) (Lessee Entries with Residual Value) The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Inception date Annual lease payment due at the beginning of January 1, 2017 each year, beginning with January 1, 2017 $124,798 Residual value of equipment at end of lease term, guaranteed by the lessee Lease term Economic life of leased equipment Fair value of asset at January 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $50,000 6 years 6 years $600,000 12% 12% The lessee assumes responsibility for all executory costs, which are expected to amount to $5,000 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $50,000. The lessee uses the straight- line depreciation method for all equipment.

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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Similar questions

When a lessor receives cash on an operating lease, which of the following accounts is increased? A. Lease Payable B. Interest Revenue: Leases C. Lease Receivable D. Rent Revenue
Compare the way a purchase option that is reasonably certain to be exercised and a lessee-guaranteed residual value are treated by the lessee and lessor when determining lease payments.
Explain which of following would result in the lessee classifying the lease as a finance lease. a. The lease is for a major part of the economic life of the asset. b. The lease term is for 12 months or less. c. The lease transfers ownership of the asset at the end of the lease.
Which of the following are normal characteristics of a financial lease? I. Maintenance of the leased asset is the responsibility of the lessee. II. The lease is generally cancellable by the lessee prior to the expiration date. III. Financial leases are generally fully amortized. IV. The lessee usually has the right to renew the lease at the end of the initial lease period. Select one: O a. I, II, III, and IV O b. I, II, and IV only O c. II, II, and IV only O d. I and Il only Oe. I and II only
A lease qualifies as a finance (sales-type) lease. Indicate an account to be used by the lessee, and an account to be used by the lessor Select one: Account to be used by the lessee Right of Use Asset Account to be used by the lessor Lease Receivable a. Ob. Account to be used by the lessee Unearned Revenue Account to be used by the lessor Sales Revenue Account to be used by the lessee Lease Expense Account to be used by the lessor Interest Revenue d. Account to be used by the lesseO Lease Liability Account to be used by the lessor Amortization Expense Account to be used by the lessee Amortization Expense Account to be used by the lessor Interest Expense e.
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Please help with an amortization schedule for the information
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Distinguish between a financing lease and an operational lease from the lessee's standpoint.
question 1: There are nine itsms list under "quantitive disclosure" for the lease. Why aren't short-term lease cost and variable lease cost shown? question 2 : What is the amount cintractual obligations and options that the lessee is reasonably certain to excercise for Operating lease? financing lease?
What are executory costs? How are they accounted for by the lessee in a capital lease when paid by the lessee? When paid by the lessor? Explain.
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