Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2024, Rhone-Metro leased equipment toWestern Soya Company for a noncancelable stated lease term of four years ending December 31, 2028, at which time possession ofthe leased asset will revert back to Rhone-Metro.●●●The equipment cost $390,000 to manufacture and has an expected useful life of six years.Its normal sales price is $445,205.The expected residual value of $26,000 on December 31, 2028, is not guaranteed.The first payment was made on December 31, 2024.Western Soya's incremental borrowing rate is 10%.Western Soya knows the interest rate implicit in the lease payments is 9%. Both companies use straight-line depreciation oramortization.[Hint: A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (i.e., a BPO).]Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)●Western Soya Company is reasonably certain to exercise a purchase option on December 30, 2027, at an option price of$12,000.Equal payments under the lease are $162,000 (including $4,000 annual maintenance costs) and are due on December 31 ofeach year.Required:1. Show how Rhone-Metro calculated the $162,000 annual lease payments.2. How should this lease be classified (a) by Western Soya Company (the lessee) and (b) by Rhone-Metro Industries (the lessor)?3. Prepare the appropriate entries for both Western Soya Company and Rhone-Metro on December 31, 2024.4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor.5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025 (the second rent payment andamortization).6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 30, 2027, assuming the purchase optionis exercised on that date.Complete this question by entering your answers in the tabs below.Required 1 Required 2Required 3LesseeRequired 3 Required 4 Required 4LessorLesseeLessorRequired 5LesseeRequired 5LessorRequired 6LesseeRequired 6Lessor

What is meant by Lease?The agreement under which the owner of the asset provides the asset to other…

Required: 1. Show how Rhone-Metro calculated the $162,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Company (the lessee) and (b) by Rhone-Metro Industries (the lessor)? 3. Prepare the appropriate entries for both Western Soya Company and Rhone-Metro on December 31, 2024. 4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor. 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025 (the second rent payment and amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 30, 2027, assuming the purchase option is exercised on that date. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6. Lessee Lessee Lessor Lessee Lessor Lessee Lessor Lessor

Required: 1. Show how Rhone-Metro calculated the $162,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Company (the lessee) and (b) by Rhone-Metro Industries (the lessor)? 3. Prepare the appropriate entries for both Western Soya Company and Rhone-Metro on December 31, 2024. 4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor. 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025 (the second rent payment and amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 30, 2027, assuming the purchase option is exercised on that date. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6. Lessee Lessee Lessor Lessee Lessor Lessee Lessor Lessor

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2016, Rhone-Metroleased equipment to Western Soya Co. for a noncancelable stated lease term of four years ending December31, 2020, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost$300,000 to manufacture and has an expected useful life of six years. Its normal sales price is $365,760. Theexpected residual value of $25,000 at December 31, 2020, is not guaranteed. Western Soya Co. can exercise abargain purchase option on December 30, 2019, at an option price of $10,000. Equal payments under the leaseare $134,960 (including $4,000 annual executory costs) and are due on December 31 of each year. The first paymentwas made on December 31, 2016. Collectibility of the remaining lease payments is reasonably assured,and Rhone-Metro has no material cost uncertainties. Western Soya’s incremental borrowing rate is 12%.Western Soya knows the interest rate implicit in…
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2021, Rhone-Metro leased equipment to Western Soya Co., for a noncancelable stated lease term of four years ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $390,000 to manufacture and has an expected useful life of six years. Its normal sales price is $449,250. The expected residual value of $25,000 at December 31,2025, is guaranteed. Western Soya Co., is reasonably certain to exercise a purchase option on December 30, 2024, at an option price of $12,000. Equal payments under the lease are $158,000 (including $3,000 annual maintenance costs) and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya's incremental borrowing rate s 8%. Western Soya knows the interest rate implicit in the lease payments is 6%. Both companies use straight-line amortization. 1. Show how Rhone-Metro…
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2024, Rhone-Metro leased equipment to Western Soya Company for a four-year period ending December 31, 2028, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $500,000 to manufacture and has an expected useful life of six years. Its normal sales price is $547,590. The expected residual value of $15,000 on December 31, 2028, is not guaranteed. Equal payments under the lease are $155.000 (including $5,000 maintenance costs) and are due on December 31 of each year. The first payment was made on December 31, 2024. Western Soya's incremental borrowing rate is 9% Western Soya knows the interest rate implicit in the lease payments is 8%. Both companies use straight-line depreciation or amortization. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1, EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Show how Rhone-Metro calculated…
Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2016, Rhone-Metro leased equipment to Western Soya Co. for a four-year period ending December 31, 2020, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $300,000 to manufacture and has an expected useful life of six years. Its normal sales price is $365,760. The expected residual value of $25,000 at December 31, 2020, is not guaranteed. Equal payments under the lease are $104,000 (including $4,000 executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2016. Collectibility of the remaining lease payments is reasonably assured, and Rhone-Metro has no material cost uncertainties. Western Soya’s incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation. Required: 1. Show how Rhone-Metro calculated the $104,000…
Subject:- accounting
Sandiago Co leased the equipment to Dedi Inc, on April 1, 2016. The lease, properly accounted for as a sale by Sandiago, has a period of 8 years ending March 31, 2024. The first of 8 equal annual payments is Rp 17,500,000 per year (excluding implementation costs) was carried out on April 1, 2016. The cost of equipment for Sandiago was Rp. 94,000,000. The equipment has an estimated useful life of 8 years with no salvage value, Sandiago uses straight-line depreciation and depreciates a full year in the year of purchase. The cash selling price of this equipment is IDR 102,690,000. Required: (1) Prepare the journal entries needed to record the lease on Sandiago's books (2) How much interest income will Sandiago recognize in 20167
Sarh Pieces Inc. creates aluminum alloy parts for commercial aircraft. In a recent transaction Sarh leased a high precision lathe machine from jack Revolving Corp. on January 1, 2019. The following information pertains to the leased asset and the lease agreement: Cost of lathe to lessor $140,000 jack's normal selling price for lathe $178,268 Useful life 7 years Estimated value at end of useful life $8,000 Lease provisions Lease term 5 years Payment frequency Annual Start date of lease January 1 Payment timing December 31 Estimated residual value at end of lease (unguaranteed) $20,000 Interest rate implicit in the lease (readily determinable by lessee) 7% The lathe machine will revert back to the lessor at end of lease term, title does not transfer to lessee at any time, and there is not a bargain purchase option. Required: a. Determine the amount of lease payment that…
Manji
Please help me
Abbott Equipment leased a protein analyzer to Werner Chemical, Incorporated, on September 30, 2024. • Abbott purchased the machine from NutraLabs, Incorporated, at a cost of $6.35 million. • The five-year lease agreement calls for Werner to make quarterly lease payments of $449,273, payable each September 30, December 31, March 31, and June 30, with the first payment on September 30, 2024. • Abbott's implicit interest rate is 16%. The useful life of the equipment is five years. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. What pretax amounts related to the lease would Abbott report in its balance sheet on December 31, 2024? 2. What pretax amounts related to the lease would Abbott report in its income statement for the year ended December 31, 2024? 3. What pretax amounts related to the lease would Abbott report in its statement of cash flows for the year ended December 31, 2024? Complete this…
On December 31, 2024, Causholi Corporation sold a machine to Monika Company and simultaneously leased it back for one year. Pertinent information at this date follows: Sales price Carrying amount Present value of lease payments ($9,000 for 12 months at 12%) Machine's estimated remaining useful life In Causholi's December 31, 2024 income statement, the gain recognized from the sale of this machine should be: Multiple Choice $337,600. $4,167. $0. $50,000. $940,000 890,000 102,300 12 years
Assume that IBM leased equipment that was carried at a cost of $150,000 to Sharon Swander Company. The term of the lease is 6 years beginning January 1, 2017, with equal rental payments of $30,044 at the beginning of each year. All executory costs are paid by Swander directly to third parties. The fair value of the equipment at the inception of the lease is $150,000. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain-purchase option, and no transfer of title. Collectibility is reasonably assured with no additional cost to be incurred by IBM.Prepare IBM’s January 1, 2017, journal entries at the inception of the lease.