Per the video, the lessee will take advantage of an option to buy a $130,000 truck in two years for $65,000, and will make annual payments of $41,303. The truck has a useful life of 5 years, and an estimated salvage value of $15,000. The lessee knows the lessors rate is 12%. Make the journal entry to record the lease on January 1, year1. Remember the first lease payment is made at the beginning of the lease.
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- Blossom Company, a machinery dealer, leased a machine to Crane Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $22,300 at the beginning of each year. The first payment is received on January 1, 2025. Blossom had purchased the machine during 2024 for $140,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 4% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Blossom at the termination of the lease. Assume that Crane Corporation does not know the rate implicit in the lease used by Blossom, and Crane's incremental borrowing rate is 6%. In addition, assume that Crane incurs initial direct costs of $10,000. Click here to view factor tables. (a) x Your answer is incorrect. Compute the amount of the lease liability and right-of-use asset for Crane. (For calculation purposes, use 5 decimal places as displayed in the factor table provided…The lowa DMV leases a building for 20 years. The lease requires 20 annual payments of $12,000 each, with the first payment due immediately. The interest rate in the lease is 11%. What is the present value of the cost of leasing the building? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 52.75.) Click here to view the factor table. Present value 2$Blossom Company, a machinery dealer, leased a machine to Crane Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $30,536 at the beginning of each year. The first payment is received on January 1, 2025. Blossom had purchased the machine during 2024 for $124,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Blossom at the termination of the lease. Click here to view factor tables. (a) Your answer is correct. Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places e.g. 5,275.) (b) Amount of the lease receivable $ eTextbook and Media Solution 201000 $30,536 × 6.58238* = $201,000 *Present value of an annuity due of 1 for 8 periods at 6%. List of Accounts Assistance…
- Blossom Company, a machinery dealer, leased a machine to Crane Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $30,536 at the beginning of each year. The first payment is received on January 1, 2025. Blossom had purchased the machine during 2024 for $124,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Blossom at the termination of the lease. Click here to view factor tables. (a) (b) (c) Suppose the collectibility of the lease payments was not probable for Blossom. Prepare the necessary journal entry for the company in 2025. (List debit entry before credit entry. 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 O for the amounts.) Date Account Titles and…The lessor company leases a building to the lessee company on 1/1/2021. The lessee will make ten annual rental payments of $77,000 at the beginning of each year, starting from 1/1/2021. Both parties expect a residual value of $17,000 at the end of the lease term, though this amount is not guaranteed. The lessor company set the lease payments with the intent of earning a 10% return, and the lessee is aware of this rate. Suppose the lessee incurs initial direct costs of $4,360 related to the lease. What is the amount for Right-of-Use Asset the lessee will record on 1/1/2021? (You must choose from the following present/future values. Please do not use the tables in the textbook, tables posted on the Blackboard, or values from a financial calculator.) Future Value Single Sum Present Value Single Sum Future Value Ordinary Annuity Present Value Ordinary Annuity Present Value Annuity Due 10%, 10 periods 2.59 0.39 15.94 6.14 6.76Give me correct answer with explanation.
- Courtland Company leased a new machine from Brendan Company. The lease term is 5 years; the estimated life of the machine is 8 years. Payments of $60,000 are due at the beginning of each year. The interest rate is 9%. The present values of an annuity due at 9% for 5 periods and 8 periods are, respectively 4.24 and 6.03. Courtland has the option to purchase the machine at the end of the lease term for $75,000, which is well below the expected fair value on that date. The present value of 1 for 5 periods and 8 periods are, respectively 0.65 and 0.50. Courtland should record a ROU asset of $254,400 $303,150 $361,800 $399,300On December 31, 2020, Sunland Company leased a truck from K Co.. The lease calls for $41,934 equal rental payment at the beginning of each year of the lease period. The annual rental payment starts from December 31, 2020. The lease term is 4 years. The fair value of the truck on December 31, 2020 is $150,001. Estimated useful life of the truck is 4 years and estimated salvage value is nil. The interest rate is 8%. Prepare journal entry to record interest expense as on December 31,2021, assuming the Sunland Company uses straight-line method of depreciation to depreciate a similar truck it owns.On January 1, Garcia Supply leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. Negotiations led to Garcia guaranteeing a $36,000 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $35,000. What is the amount to be added to the right-of-use asset and lease liability under the residual value guarantee?
- On January 1, Garcia Supply leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. Negotiations led to Garcia guaranteeing a $36,000 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $35,000. What is the amount to be added to the right-of-use asset and lease liability under the residual value guarantee? Note: Use tables, Excel, or a financial calculator. Enter your answer in whole dollars. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)Macinski Leasing leases a new machine to Sharrer SA. The machine has a cost of $70,000 and fair value of $95,000. Under the 3-year, non- cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Macinski expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2020.Instructionse. Prepare the journal entry at commencement of the lease for Sharrer, assuming (1) Sharrer does not know Macinski's implicit rate (Sharrer's incremental borrowing rate is 9%), and (2) Sharrer incurs initial directs costs of $10,000.Telor, a private company that follows ASPE, entered into a lease agreement with Global Leasing Corporation to lease a warehouse for six years. Annual lease payments are $21,000, payable at the beginning of each lease year. Telor signed the lease agreement on January 1, 2021, and made the first payment on that date. At the end of the lease, the machine will revert back to Global Leasing Corporation. The normal useful life of the warehouse is 10 years. At the time of the lease, the warehouse could be purchased for $108,000. Telor does not know the implicit rate of the lease; Telor's incremental borrowing rate is 10%. Telor uses straight-line depreciation for this type of asset. Required: Using the three criteria under ASPE, prove whether this is an operating or capital lease. Prepare a lease amortization schedule for the lease. Round all amounts to the nearest dollar. Prepare the journal entries for 2021 and 2022 for Telor. Round amounts to the nearest dollar.