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20.
On December 31, 2019, Sandhill Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Sandhill agreed to make annual lease payments of $15,000, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $7,500, though Sandhill does not guarantee any residual value to Terminator.
What amount will Sandhill record as its lease liability on December 31, 2019, if its incremental borrowing rate is 5% and the implicit rate of the lease is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.)
Click here to view factor tables.
Lease liability | $ |
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- On January 1, 2020, Blossom Company leased equipment to Flynn Corporation. The following information pertains to this lease. 1. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $3,000, while the expected residual value at the end of the lease is $7,000.2. Equal rental payments are due on January 1 of each year, beginning in 2020.3. The fair value of the equipment on January 1, 2020, is $140,000, and its cost is $90,000.4. The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis.5. Blossom set the annual rental to ensure a 7% rate of return. Flynn’s incremental borrowing rate is 8%, and the implicit rate of the lessor is unknown.6. Collectibility of lease payments by the lessor is probable. Both the lessor and the lessee’s accounting periods ending on December 31. Click here to view factor tables.(For calculation purposes, use 5 decimal places as…On December 31, 2019, Shamrock Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Shamrock to make annual payments of $7,909 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $4,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Shamrock uses the straight-line method of depreciation for all of its plant assets. Shamrock’s incremental borrowing rate is 8%, and the lessor’s implicit rate is unknown. (a.)What type of lease is this? This is a/an _________ lease. (operating / finance) (b.) Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Present value of the lease payments $ (c.) Prepare all necessary journal entries for Shamrock for this lease through…On December 31, 2019, Marin Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Marin to make annual payments of $8,566 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $4,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Marin uses the straight-line method of depreciation for all of its plant assets. Marin’s incremental borrowing rate is 4%, and the lessor’s implicit rate is unknown.Click here to view factor tables. https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf a) Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Present value of the lease payments $enter the Present value…
- 1. On December 31, 2019, Carla Vista Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Carla Vista agreed to make annual lease payments of $20,000, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term Is $10,000, though Carla Vista does not guarantee any residual value to Terminator. What amount will Carla Vista record as its lease liablity on December 31, 2019, If Its Incremental borrowing rate Is 5% and the Implicit rate of the lease Is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal place5, e.g. 5,275.) click here to view factor tables. Lease liablity 23153 click if you would like to Show k for this question: Open Show Work LINK TO TEXTGlaus Leasing Company agrees to lease equipment to Jensen Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2020, is $700,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $50,000. Jensen estimates that the expected residual value at the end of the lease term will be $50,000. Jensen amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Glaus desires a 5% rate of return on its investments. Jensen's incremental borrowing rate is 6%, and the lessor's implicit rate is unknown. Instructions (Assume the accounting period ends on…On January 1, 2020, Bensen Company leased equipment to Flynn Corporation. The following information pertains to this lease. 1. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value at the end of the lease is $5,000. 2. Equal rental payments are due on January 1 of each year, beginning in 2020. 3. The fair value of the equipment on January 1, 2020, is $150,000, and its cost is $120,000. 4. The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis. 5. Bensen set the annual rental to ensure a 5% rate of return. Flynn's incremental borrowing rate is 6%, and the implicit rate of the lessor is unknown. 6. Collectibility of lease payments by the lessor is probable. Instructions (Both the lessor and the lessee's accounting periods end on December 31.) a. Discuss the nature of this lease to Bensen and Flynn. b.…
- ABC Company uses lease as a means of selling its equipment. On July 1,2019, the company leased an equipment to DEF Company. The cost of the equipment to ABC Company was P 684,000. The fair market value ( which was the sales price) was P 792,236.54 at the time of the inception of the lease. Annual lease payments are P 135,000 and are payable in advance for 8 years. The equipment has an expected economic life of 10 years. At the end of the lease term , title to the equipment will pass to DEF Company. Implicit interest rate is 10%. required: (D)What is the manufacturer's profit recognized by ABC Company? (E)Assume that at the end of the lease term, the title to the equipment will not pass to the lessee. The lessee however, guarantees a residual value of P 50,000 at the end of the lease term. How much is the cost of goods sold recognized by ABC Company pertaining to the lease? (F)What is the ABC Company's total financial revenue pertaining to the lease?Indiana Jones Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires six annual payments of $40,000 each, beginning December 31, 2019. In addition, Indiana Jones guarantees the lessor a residual value of $20,000 at the end of the lease. However, Indiana Jones believes it is probable that the expected residual value at the end of the lease term will be $10,000. The equipment has a useful life of 6 years. Prepare Indiana Jones' December 31, 2019, journal entries, assuming the implicit rate of the lease is 6% and this is known to Indiana Jones.On December 31, 2024, Sunland Company leased machinery from Sheridan Corporation for an agreed-upon lease term of 3 years. Sunland agreed to make annual lease payments of $20,000, beginning on December 31, 2024. The expected residual value of the machinery at the end of the lease term is $10,000, though Sunland does not guarantee any residual value to Sheridan. What amount will Sunland record as its lease liability on December 31, 2024, if its incremental borrowing rate is 4% and the implicit rate of the lease is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.) Click here to view factor tables. Lease liability $
- On December 31, 2019, Shamrock Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Shamrock to make annual payments of $7,909 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $4,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Shamrock uses the straight-line method of depreciation for all of its plant assets. Shamrock’s incremental borrowing rate is 8%, and the lessor’s implicit rate is unknown. Prepare all necessary journal entries for Shamrock for this lease through December 31, 2020. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit CreditRexon Company leases non-specialized equipment to Ten-Care Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 8 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. 2. The cost of the equipment is $500,000. The equipment has an estimated life of 8 years and has a zero estimated value at the end of that time. 3. The equipment has a fair value of $500,000. 4. Ten-Care agrees to pay all executory costs directly to a third party. 5. The lease contains no renewal or bargain purchase option. 6. The interest rate implicit in the lease is 10%. 7. The initial direct costs are insignificant and assumed to be zero. 8. It is probable that Rexon will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. Required: 1. Next Level Assuming that the lease is a sales-type lease from Rexon’s point of view, calculate the…
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