Three different lease transactions are presented below for Crane Enterprises. Assume that all lease transactions start on January 1. 2024. Crane does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Crane Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $12,300 $86,400 $57,479 3.5% Vehicles 6 years 7 years $13,140 $75,000 $71.637 4% Office Equipment 3 years 6 years $3,420 $15,450 $9,519 8%

Three different lease transactions are presented below for Crane Enterprises. Assume that all lease transactions start on January 1. 2024. Crane does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Crane Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $12,300 $86,400 $57,479 3.5% Vehicles 6 years 7 years $13,140 $75,000 $71.637 4% Office Equipment 3 years 6 years $3,420 $15,450 $9,519 8%

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

8. On January 1, 2019, an entity leased a machinery for 4 years which is the same as the useful life of the machinery at annual rental or fixed payment of P120,000. The lease provides for a transfer of ownership of the underlying asset to the lessee at the end of the lease term. The implicit interest rate of the lease is 12%. (Do not round off the PVF). The lease payment is to be made at the end of each year. Determine the noncurrent portion of the lease liability at the end of 2019. (Round off final answer to whole number)
A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 7%. Required: If the lessee's fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its income statement for the first year ended December 31 (ignore taxes)?
A lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over a six-year lease term (also the asset’s useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 5%. Required: Complete the amortization schedule for the first two payments. If the lessee’s fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable?
The following facts pertain to a non-cancelable lease agreement between Cullumber Leasing Company and Crane Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 2025 Residual value of equipment at end of lease term, guaranteed by the lessee January 1, 2025 $125,377 $54,000 Expected residual value of equipment at end of lease term $49,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2025 $660,000 Lessor's implicit rate 8 % Lessee's incremental borrowing rate 8 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. (a) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.) Date 1/1/25 $ 1/1/25…
The following information relates to an equipment lease with an inception date of January 1: Fair value of equipment at lease inception, $56,000 Lease term, 5 years Economic life of property, 6 years Implicit interest rate, 7% Annual lease payment due on December 31, $13,200 The equipment reverts back to the lessor at the end of the lease term. How much is recorded as the lease liability on the lease inception date? Select one: a. $66,000 b. $56,000 c. $57,911 d. $54,123
Provide all journal entries that Kelly K. inc. will record over the whole term of the lease.
Cullumber Company signed a lease for an office building for a period of 9 years. Under the lease agreement, a security deposit of $7,200 is made. The deposit will be returned at the expiration of the lease with interest compounded at 6% per year. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What amount will Cullumber receive at the time the lease expires? (Round answer to 2 decimal places, e.g. 25.25.) Amount at the time the lease expires
19 On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $125,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,214,031 lease liability. Determine the interest rate implicit in the lease agreement. 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)
On July 1, 2020, Shroff Company leased a warehouse building under a 10-year lease agreement. The lease requires quarterly lease payments of $4,500. The first lease payment is due on September 30, 2020. The lease was reported as a finance lease using an 8% annual interest rate. a. Prepare the journal entry to record the commencement of the lease on July 1, 2020. b. Prepare the journal entries that would be necessary on September 30 and December 31, 2020. c. Post the entries from parts a and b in their appropriate T-accounts. d. Prepare a financial statement effects template to show the effects template to show the effects of the entries from parts a and b on the balance sheet and income statement.
Sur Food Corp., leased machine from Al-Urami Corp. the lease agreement for the O.R 750,000 (fair and present value of the lease payment) machine specified five equal payments at the end of each year. The implicit interest rate was 9% Required: 1. Prepare the journal entry for Al-Urami Corp. at the inception of the lease on January 1, 2019. 2. Prepare an amortization schedule for the three-year term of the lease Note: Present value of an ordinary annuity of $1.n=5,1%39% is 3.88965
On January 1, 2024, Stone leased an office building. Terms of the lease require Stone to make 20 annual lease payments of $124, 000 beginning on January 1, 2024. An 11% interest rate is implicit in the lease agreement. At what amount should Stone record the lease liability on January 1, 2024, before any lease payments are made? Note: Round your final answers to nearest whole dollar amount. Show less Table, Excel, or calculator function Table, Excel, or calculator function: Payment: n = i : Liability: =
WHAT IS THE INCREASE IN LEASE LIABILITY?