P330,000 including executory cost of P30,000, and the machine Troy Company prepared the following amortization schedule for the lease of a machine from another entity. The machine shall be returned to the lessor at the end of the lease term. The lease agreement required four annual payments of Problem 10-10 (IFRS) a had an economic life of six years. Reduction Balance of liability Interest Minimum lease payment expense liability 1 /1/2021 12/31/ 2021 12/31/ 2022 12/31/ 2023 12/31/ 2024 300,000 300,000 300,000 300,000 98,515 78,366 56,203 31,766 201,485 221,634 243,797 268,234 985,150 783,665 562,031 318,234 50,000 Required: 1. Prepare journal entry to record the finance lease on January 1, 2021. 2. Prepare journal entry on December 31, 2021 to record the annual lease payment and the executory cost. 3. Prepare journal entry to record the depreciation for 2021. 4. Prepare journal entry to record the annual lease.payment and the executory cost on December 31, 2024. 5. Prepare journal entry to record the return of the machine to the lessor. Assume the fáir value is the same as the residual value guarantee.

P330,000 including executory cost of P30,000, and the machine Troy Company prepared the following amortization schedule for the lease of a machine from another entity. The machine shall be returned to the lessor at the end of the lease term. The lease agreement required four annual payments of Problem 10-10 (IFRS) a had an economic life of six years. Reduction Balance of liability Interest Minimum lease payment expense liability 1 /1/2021 12/31/ 2021 12/31/ 2022 12/31/ 2023 12/31/ 2024 300,000 300,000 300,000 300,000 98,515 78,366 56,203 31,766 201,485 221,634 243,797 268,234 985,150 783,665 562,031 318,234 50,000 Required: 1. Prepare journal entry to record the finance lease on January 1, 2021. 2. Prepare journal entry on December 31, 2021 to record the annual lease payment and the executory cost. 3. Prepare journal entry to record the depreciation for 2021. 4. Prepare journal entry to record the annual lease.payment and the executory cost on December 31, 2024. 5. Prepare journal entry to record the return of the machine to the lessor. Assume the fáir value is the same as the residual value guarantee.

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

100%

P330,000 including executory cost of P30,000, and the machine ·
for the lease of a machine from another entity. The machine
Troy Company prepared the following amortization schedule
shall be returned to the lessor at the end of the lease term.
The lease agreement required four annual payments of
Problem 10-10 (IFRS)
had an economic life of six years.
Reduction Balance of
liability
Interest
Minimum lease
payment
expense
liability
1 /1/2021
12/31/ 2021
12/31/2022
12/31/ 2023
12/31/ 2024
300,000
300,000
300,000
300,000
98,515
78,366
56,203
31,766
201,485
221,634
243,797
268,234
985,150
783,665
562,031
318,234
50,000
Required:
1. Prepare journal entry to record the finance lease on
January 1, 2021.
2. Prepare journal entry on December 31, 2021 to record
the annual lease payment and the executory cost.
3. Prepare journal entry to record the depreciation for 2021.
4. Prepare journal entry to record the annual lease.payment
and the executory cost on December 31, 2024.
5. Prepare journal entry to record the return of the machine
to the lessor. Assume the fáir value is the same as the
residual value guarantee.

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