FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS
FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS
24th Edition
ISBN: 9781265497613
Author: Wild
Publisher: MCG
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Chapter 14, Problem 11BPSB
To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Expert Solution
Check Mark

Answer to Problem 11BPSB

    Date ParticularsAmount ($)Amount($)
    January 1Lease asset- Equipment39000
    Lease Liability39000
    ( to record asset or liability at the inception of lease)

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Expert Solution
Check Mark

Answer to Problem 11BPSB

    Date ParticularsAmount ($)Amount($)
    January 1Lease expense14000
    Cash 14000
    ( to record lease rent payment)

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Expert Solution
Check Mark

Answer to Problem 11BPSB

    Date ParticularsAmount ($)Amount($)
    Year 1 Depreciation (Reduction of gross asset)13000
    Depreciation expense13000
    ( to record asset depreciation)
    Year 2Depreciation (Reduction of gross asset)13000
    Depreciation expense13000
    ( to record asset depreciation)
    Year 3Depreciation (Reduction of gross asset)13000
    Depreciation expense13000
    ( to record asset depreciation)

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Expert Solution
Check Mark

Answer to Problem 11BPSB

    Date ParticularsAmount ($)Amount($)
    Year 1 Lease Liability14000
    Interest 1975
    Cash 15975
    ( to record lease rental payment)
    Year 2 Lease Liability14000
    Interest 1025
    Cash 15025
    ( to record lease rental payment)

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.

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Chapter 14 Solutions

FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS

Ch. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - Prob. 14DQCh. 14 - Prob. 15DQCh. 14 - Refer to the statements for Google in Appendix A....Ch. 14 - Prob. 17DQCh. 14 - Prob. 18DQCh. 14 - Prob. 19DQCh. 14 - Prob. 1QSCh. 14 - QS 14-2 Issuing bonds at par P1 Dunphy Company...Ch. 14 - QS 14-3 Issuing bonds at par P1 Madrid Company...Ch. 14 - QS 14-4 Recording bond issuance and interest P1 P2...Ch. 14 - QS 14-5 Journalizing discount bond issuance...Ch. 14 - Prob. 6QSCh. 14 - OS 14-6 Straight line: Bond computations...Ch. 14 - QS 14-8 Recording bond issuance and discount...Ch. 14 - QS 14-9 Straight-Line: Premium bond computations...Ch. 14 - On July 1. Aloha Co. s a call option that...Ch. 14 - Prob. 11QSCh. 14 - Prob. 12QSCh. 14 - Prob. 13QSCh. 14 - Prob. 14QSCh. 14 - Prob. 15QSCh. 14 - Prob. 16QSCh. 14 - Prob. 17QSCh. 14 - Prob. 18QSCh. 14 - QS 14–17C Recording operating leases C3 Jin Li,...Ch. 14 - Prob. 20QSCh. 14 - Prob. 1ECh. 14 - Exercise 14-2 Recording bond issuance at par....Ch. 14 - Exercise 14-3 Recording bond issuance and...Ch. 14 - Prob. 4ECh. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Prob. 9ECh. 14 - Exercise 14-10 Bond retirement by call option...Ch. 14 - Exercise 14-11 Straight-Line: Bond computations,...Ch. 14 - Installment note amortization table C1 On January...Ch. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - Prob. 15ECh. 14 - Prob. 16ECh. 14 - Prob. 17ECh. 14 - Prob. 18ECh. 14 - Exercise 14-19u Effective Interest: Amortization...Ch. 14 - Prob. 20ECh. 14 - Prob. 21ECh. 14 - Prob. 22ECh. 14 - Prob. 1APSACh. 14 - Prob. 2APSACh. 14 - Prob. 3APSACh. 14 - Prob. 4APSACh. 14 - Prob. 5APSACh. 14 - Prob. 6APSACh. 14 - Prob. 7APSACh. 14 - Prob. 8APSACh. 14 - Prob. 9APSACh. 14 - Problem 14-10AB Effective Interest: Amortization...Ch. 14 - Prob. 11APSACh. 14 - Prob. 12APSACh. 14 - Problem 14-1B Straight-Line: Amortization of bond...Ch. 14 - Prob. 2BPSBCh. 14 - Prob. 3BPSBCh. 14 - Prob. 4BPSBCh. 14 - Prob. 5BPSBCh. 14 - Prob. 6BPSBCh. 14 - Prob. 7BPSBCh. 14 - Prob. 8BPSBCh. 14 - Prob. 9BPSBCh. 14 - Prob. 10BPSBCh. 14 - Prob. 11BPSBCh. 14 - Prob. 12BPSBCh. 14 - Prob. 14SPCh. 14 - Prob. 1AACh. 14 - Prob. 2AACh. 14 - Prob. 3AACh. 14 - Prob. 1BTNCh. 14 - Prob. 2BTNCh. 14 - Prob. 3BTNCh. 14 - Prob. 4BTNCh. 14 - Prob. 5BTNCh. 14 - Prob. 6BTN
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