The City of Clear Lake signed a lease agreement with Mountainside Builders whereby Mountainside will construct a new office building for city administrative use and lease it to the City for 30 years. The City has agreed to make an initial payment of $822,441 and annual payments in the same amount for the next 29 years. At a 6 percent discount rate, the present value of the lease payments totals $12 million. Upon completion, the building had an appraised value of $13 million and an estimated useful life of 40 years. Required a. Provide the journal entries the city should make in both the capital projects fund general journal and the governmental activities general journal to record the lease at the date of inception. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in whole dollars, not in millions.) Transaction Fund / Governmental Activities 1. Record the lease at the date of inception. 1 Answer is complete but not entirely correct. General Journal Debit Credit Capital Projects Fund Expenditures Cash Other Financing Sources-Lease Agreements Governmental Activities Lease Assets-Buildings Cash Capital Lease Obligations Payable 12,000,000 ( 822,441 11,177,559 ( 12,000,000 822,411x 11,177,589 x
The City of Clear Lake signed a lease agreement with Mountainside Builders whereby Mountainside will construct a new office building for city administrative use and lease it to the City for 30 years. The City has agreed to make an initial payment of $822,441 and annual payments in the same amount for the next 29 years. At a 6 percent discount rate, the present value of the lease payments totals $12 million. Upon completion, the building had an appraised value of $13 million and an estimated useful life of 40 years. Required a. Provide the journal entries the city should make in both the capital projects fund general journal and the governmental activities general journal to record the lease at the date of inception. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in whole dollars, not in millions.) Transaction Fund / Governmental Activities 1. Record the lease at the date of inception. 1 Answer is complete but not entirely correct. General Journal Debit Credit Capital Projects Fund Expenditures Cash Other Financing Sources-Lease Agreements Governmental Activities Lease Assets-Buildings Cash Capital Lease Obligations Payable 12,000,000 ( 822,441 11,177,559 ( 12,000,000 822,411x 11,177,589 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education