Requirements: 1) Calculate the amount Wang should record as a leased asset and lease liability. 2) Prepare an amortization schedule to show the pattern of interest expense over the 3 year lease. 3) Show all of the journal entries recorded by Wang that relate to this leased asset in years 2016 and 2017.
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![Question 2
Wang Enterprises Inc leased an asset on January 1, 2016. The lease ends on December 31, 2020.
Term of the lease:
5 years
$37,000.00
$30,000.00
$52,000.00
The annual lease payments are:
The lease payments are due at the start of the period.
Wang can purchase the asset at the end of the lease for:
Expected fair value of asset at end of lease:
The machine has an estimated useful life of:
After which it is estimated the asset will have zero salvage value.
Wang depreciates all its operating assets on a straight-line basis.
The lessor's implicit rate of return from the lease is:
(Which is less than the firm's implied cost of debt)
Requirements:
7 years
7.00%
1) Calculate the amount Wang should record as a leased asset and lease liability.
2) Prepare an amortization schedule to show the pattern of interest expense over the 3 year lease.
3) Show all of the journal entries recorded by Wang that relate to this leased asset in years 2016 and 2017.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1134513-47c3-47c8-bf76-d7cb31a7f997%2F8c8cf441-458c-4942-8b05-e43a1742ef4d%2F484ia0k_processed.jpeg&w=3840&q=75)
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- Leased Assets Koffman and Sons signed a four-year lease for a forklift on January 1, 2016. Annual lease payments of $1,510, based on an interest rate of 8%, are to be made every December 31, beginning with December 31, 2016. Required Assume that the lease is treated as an operating lease. Will the value of the forklift appear on Koffmans balance sheet? What account will indicate that lease payments have been made? Assume that the lease is treated as a capital lease. Prepare any journal entries needed when the lease is signed. Explain why the value of the leased asset is not recorded at $6,040 (1,5104). Prepare the journal entry to record the first lease payment on December 31, 2016. Calculate the amount of depreciation expense for the year 2016. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2016?Problem 1 At the beginning of 2022, EVS Industries acquired a machine with fair value of P6,074,700 by signing a 4-year lease, which is the expected useful life of the machine passing. The lease is payable in four equal annual payments of P2 million at the end of each year. The implicit rate in the lease is 12% 22. What pretax amounts related to the lease would EVS report in its income statement for the year ended December 31, 2022?PROBLEM 4: Lease arrangement with Guaranteed Residual Value and annual fixed lease payment is paid at the beginning of each year, with DIRECT COST and LEASE INCENTIVE Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of P600,000 which is to be paid in advance at the beginning of each year. The lease contract provides that the lessee has guaranteed a P100,000 residual value of the leased asset and a lease incentive P80,000. Initial direct cost incurred and paid by the lessee amounted to P200,000. The implicit interest rate in the lease is 10%. REQUIRED: Prepare table of amortization and journal entries for the entire lease term.
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- PROBLEM 2: Lease arrangement with PURCHASE OPTION An entity leased a machinery with useful life of 10 years on January 1, 2020 for period of 8 years with fixed annual rental of P800,000 which is to be paid at the end of each year. The lease contract provides that the lessee has the option to purchase the leased asset at the end of the lease term by paying P50,000. The estimated residual value of the leased asset at the end of its useful life is P150,000. The lessee is reasonably certain to exercise the bargain purchase option. The implicit interest rate in the lease is 12% and the incremental borrowing rate is 10%. REQUIRED: Prepare table of amortization and journal entries for the entire lease term. PROBLEM 3: Lease arrangement with GUARANTEED Residual Value Lazy Company leased an equipment with useful life of 6 years on January 1, 2020 for period of 5 years with fixed annual rental of P600,000 which is to be paid at the end of each year. The lease contract provides that the lessee…Problem 1 On January 1, 2020, Petty Company leased a machine with the following provisions. Annual lease payment in advance at the beginning of each year, 1,000,000 10 years 12 years starting January 1, 2020 Lease term Useful life of machine Implicit interest rate in the lease 12% PV of an ordinary annuity of 1 at 12% for 10 periods PV of an annuity of 1 in advance at 12% for 10 periods PV of 1 at 12% for 10 periods 5.650 6.328 0.322 The entity has an option to purchase the machine on January 1, 2030 by paying P200,000. At the commencement date, it is reasonably certain that the purchase option will be exercised. Required: Prepare journal entries on the books of Petty Company for 2020 and 2021.1. Question 1 Illini leases another piece of equipment from Cubs Corporation under a four-year lease agreement on 1/1/20x1. The lease specifies annual payments on each 1/1 and the first payment of $10,000 is made on 1/1/20x1. The lease also specifies a 3% annual increase in the lease payments. The equipment has a fair value of $100,000 on 1/1/20x1. The expected useful life of the equipment is 10 years with no residual value. The equipment will be returned to Cubs at the end of the lease term. The implicit rate is 10%. Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A]. Project 2.2 Part 2 Journal Entries Date Account Name (Debit) Account Name (Credit) Debit Credit 1/1/20X1 ROU assets [A] Lease obligation [B] 1/1/20X1 Lease obligation [C] Cash [D] 12/31/20X1 Rental expense [E]…
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