Tamarisk Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 5 years and requires equal rental payments of $49,271 at the beginning of each year of the lease, starting on the commencement date (December 31, 2024). The equipment has a fair value at the commencement date of the lease of $220,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 6%. Click here to view factor tables. Prepare Tamarisk's 2024 and 2025 journal entries, assuming Tamarisk depreciates similar equipment it owns on a straight-line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record lease liability) Debit Credit

Tamarisk Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 5 years and requires equal rental payments of $49,271 at the beginning of each year of the lease, starting on the commencement date (December 31, 2024). The equipment has a fair value at the commencement date of the lease of $220,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 6%. Click here to view factor tables. Prepare Tamarisk's 2024 and 2025 journal entries, assuming Tamarisk depreciates similar equipment it owns on a straight-line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record lease liability) Debit Credit

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 6P: Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a...

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Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?
Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.
Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).
Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.
Marin Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 4 years and requires equal rental payments of $108,765 at the beginning of each year of the lease, starting on the commencement date (December 31, 2024). The equipment has a fair value at the commencement date of the lease of $370,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 12%. Click here to view factor tables. Prepare Marin's 2024 and 2025 journal entries, assuming Marin depreciates similar equipment it owns on a straight-line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.…
Teal Mountain Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 5 years and requires equal rental payments of $73,118 at the beginning of each year of the lease, starting on the commencement date (December 31, 2024). The equipment has a fair value at the commencement date of the lease of $310,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 9%. Click here to view factor tables. Prepare Teal Mountain's 2024 and 2025 journal entries, assuming Teal Mountain depreciates similar equipment it owns on a straight- line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal…
Windsor Company leased equipment from Costner Company, beginning on December 31, 2024. The lease term is 4 years and requires equal rental payments of $87,122 at the beginning of each year of the lease, starting on the commencement date (December 31, 2024). The equipment has a fair value at the commencement date of the lease of $320,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 6%. Click here to view factor tables. Prepare Windsor's 2024 and 2025 journal entries, assuming Windsor depreciates similar equipment it owns on a straight-line basis. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.…
Teal Mountain Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 8 years and requires equal rental payments of $54,782 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $340,000, an estimated useful life of 8 years, and no estimated residual value. The appropriate interest rate is 8%. Click here to view factor tables. Prepare Teal Mountain's 2019 and 2020 journal entries, assuming Teal Mountain depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit (To record lease liability) (To record lease payment) (To record interest…
Sage Hill Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 5 years and requires equal rental payments of $68,401 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $290,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 9%.Click here to view factor tables.Prepare Sage Hill’s 2019 and 2020 journal entries, assuming Sage Hill depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)
Waterworld Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 4 years and requires equal rental payments of $41,933 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $150,001, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 8%. Prepare Waterworld's 2019 and 2020 journal entries, assuming Waterworld depreciates similar equipment it owns on a straight-line basis
Sage Hill Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 4 years and requires equal rental payments of $113,273 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $400,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 9%.Click here to view factor tables.Prepare Sage Hill’s 2019 and 2020 journal entries, assuming Sage Hill depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit enter an…
Larkspur Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 4 years and requires equal rental payments of $ 64,298 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $ 230,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 8%. Prepare Larkspur’s 2019 and 2020 journal entries, assuming Larkspur depreciates similar equipment it owns on a straight-line basis.