Weam Oil Company uses successful cost approach acquired the following lease: Acres Туре Significant Significant Individually Insignificant Lease Bonus/acre Term 3 years A. 500 $20 1,000 10,000 4 years 10 years B. $50 $50 C-F During the next three years, Weam drilled 4 dry holes on lease B. Weam still intends to try two more time before the lease expired. Few days before the end of the primary term for lease B, Weam negotiated a new lease for Lease B. The lease bonus is $75/acre on the new lease. The journal entry to record the transactions on Lease B include: OAA debit to surrender lease expenses of $50,000 OB.A debit to unproved property of $50,000 OCA credit to cash of $75,000 OD.A debit to unproved property of $125,000

Weam Oil Company uses successful cost approach acquired the following lease: Acres Туре Significant Significant Individually Insignificant Lease Bonus/acre Term 3 years A. 500 $20 1,000 10,000 4 years 10 years B. $50 $50 C-F During the next three years, Weam drilled 4 dry holes on lease B. Weam still intends to try two more time before the lease expired. Few days before the end of the primary term for lease B, Weam negotiated a new lease for Lease B. The lease bonus is $75/acre on the new lease. The journal entry to record the transactions on Lease B include: OAA debit to surrender lease expenses of $50,000 OB.A debit to unproved property of $50,000 OCA credit to cash of $75,000 OD.A debit to unproved property of $125,000

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

rr
Required State with reasons what type of lease you think this is Compute the present value of the minimum lease payments Prepare schedule of the lease payments for the lease period What expense would Massey Ferguson recognize on June 30 2011? and 2012
APPLE Company leased a manufacturing machine from 123 Company on 1/1/2020 for 10 years. The lease terms are as follows: a. 123 assumes 10% interest b. First rent is payable on 1/1/2020 and on 12/31 the remaining life of the lease c. Estimated economic life of the aircraft is 10 years. d. Cost of the aircraft to 123 is $500,000. e. 123 wants to recover its investment and earns A. What type of lease is this for APPLE and 123? B. Calculate the annual rent. C. Make journal entries by both APPLE and 123 for the first year (1/1/20 to 12/31/2
Lamis Oil Company, uses successful cost approach, acquired the following lease: Lease Acres Bonus/acre $50 Term Туре Significant Significant Individually Insignificant A. 5,000 5,000 30,000 $75 $40 3 years 2 years 10 years C-F In acquiring and exploring these leases, Lamis Oil incurred the following additional cost: Shooting rights Salary of in-house lawyer working on lease Salaries for G&G activities Salaries of landmen working on lease $60,000 $20,000 $50,000 $30,000 Lamis Oil Company allocates internal costs relating to lease acquisition to specific leases. How much is the capitalized amount to be recorded for unproved property for lease B? OA. $66,250 O B. $50,000 OC. $381,250 O D. $375,000
Please correct solution with explanation and do not provided image format
San
The following facts pertain to a non-cancelable lease agreement between Wildhorse Leasing Company and Windsor Company, a lessee. Commencement date June 1, 2025 Annual lease payment beginning with June 1, 2025 $19,998.50 Bargain purchase option price at end of lease term $7,000.00 Lease term Economic life of leased equipment (no salvage value) Lessor's cost Fair value of asset at June 1, 2025 4 years 12 years $56,000 $78,999 Lessor's implicit rate (known to lessee) 6% Lessee's incremental borrowing rate 69 The collectibility of the lease payments by Wildhorse is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) (b) (c) Your answer is partially correct. Prepare a lease amortization schedule for Windsor for the 4-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) WINDSOR COMPANY (Lessee) Date 6/1/25 $ 6/1/25 6/1/26 6/1/27 6/1/28 5/31/29 Annual Lease Payment Plus BPO $ Lease…
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $366,951. Other information: 5 years $88,000 on January 1 each year 5 years Lease term Annual payments Life of asset Fair value of asset $366,951 Implicit interest rate 10% Incrementa1 rate 10% There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.) View transaction list Journal entry worksheet 1 2 3 Record the entry at the inception of the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018
Do not give solution in image
Recording Operating Lease-Lessor Gomez Inc. leases a vehicle from CareMax Inc. on January 1 for a three-year period. Gomez agrees to make $9,600 annual payments beginning on January 1. Prepare the journal entries during the year for CareMax Inc. assuming that the fair value of the vehicle is $44,800 and it has a useful life of 6 years with no salvage value (depreciated using the straight-line method). CarMax Inc. appropriately classifies the lease as an operating lease. Note: Round your answers to the nearest whole dollar. Account Name Date Jan, 1 Dec. 31 Dec. 31 Check To record receipt of lease payment To record lease revenue + # To record depreciation → = → # Dr. 0 0 0 0 0 0 Cr. 0 0 0 0 0 0
Reardon Company leased an asset from Mackinac Company. Data: ● ● ● ● . Five-year, noncancellable lease begins 1/1/22. Asset life is five years Payments of $20,711 each January 1. Asset FMV $100,000; Lessor book value $85,000 Guaranteed salvage value $5,000; $1,500 salvage value expected by lessee Applicable rate is 4% Reardon's 12/31/22 Right of Use asset balance will be approximately Select one: O a. $79,259 O b. $78,923 O c. $76,712 O d. $79,013 Oe. $76,137
Fitbit Ltd has leased a machine on the following terms:Date of entering lease 1 July 2019Duration of lease 5 yearsLife of asset 6 yearsUnguaranteed residual value $40,000Lease payments inception (at the start) $60,000Annual payments (5) $65,000Implied rate 11.0 % Required:Determine the Fair Value (rounded off) of the leased asset. (7 marks)