The classification of the lease. Given information: Lease term is 3 years. Title is to be retained by the lessor at the end of the lease term. Residual value guaranteed by the third party is $30,000. Collection of guaranteed value is probable. Unguaranteed residual life is $11,610. Economic life of the equipment is 6 years. Fair value of the asset is $108,000. Carrying value of the asset is $86,400. Implicit interest rate is 5% Annual lease payments are $25,200 due on Jul/1 each year

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Answer 1

Question

Chapter 18, Problem 18.11P

a.

To determine

The classification of the lease.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due on Jul/1 each year

b.

To determine

To prepare: The journal entries of a lease for the lessor.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due in Jul/1 each year

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Answer 2

Question

Chapter 18, Problem 18.11P

a.

To determine

The classification of the lease.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due on Jul/1 each year

b.

To determine

To prepare: The journal entries of a lease for the lessor.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due in Jul/1 each year

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Answer 3

Question

Chapter 18, Problem 18.11P

a.

To determine

The classification of the lease.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due on Jul/1 each year

b.

To determine

To prepare: The journal entries of a lease for the lessor.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due in Jul/1 each year

Expert Solution & Answer

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Answer 4

Question

Chapter 18, Problem 18.11P

a.

To determine

The classification of the lease.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due on Jul/1 each year

b.

To determine

To prepare: The journal entries of a lease for the lessor.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due in Jul/1 each year

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Answer 5

Chapter 18, Problem 18.11P

a.

To determine

The classification of the lease.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due on Jul/1 each year

b.

To determine

To prepare: The journal entries of a lease for the lessor.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due in Jul/1 each year

Answer 6

Chapter 18, Problem 18.11P

a.

To determine

The classification of the lease.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due on Jul/1 each year

Answer 7

Chapter 18, Problem 18.11P

a.

To determine

The classification of the lease.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due on Jul/1 each year

Answer 8

b.

To determine

To prepare: The journal entries of a lease for the lessor.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due in Jul/1 each year

Answer 9

b.

To determine

To prepare: The journal entries of a lease for the lessor.

Given information:

Lease term is 3 years.

Title is to be retained by the lessor at the end of the lease term.

Residual value guaranteed by the third party is $30,000.

Collection of guaranteed value is probable.

Unguaranteed residual life is $11,610.

Economic life of the equipment is 6 years.

Fair value of the asset is $108,000.

Carrying value of the asset is $86,400.

Implicit interest rate is 5%

Annual lease payments are $25,200 due in Jul/1 each year

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 18 - Does the lessee become the owner of the equipment...Ch. 18 - Prob. 18.2Q Ch. 18 - Prob. 18.3Q Ch. 18 - What are typical terms and provisions in a lease...Ch. 18 - How does a lease offer business and financial...Ch. 18 - Prob. 18.6Q Ch. 18 - How is the right-of-use asset measured?Ch. 18 - What components are included in a lease contract?Ch. 18 - How does a lessee separate lease and nonlease...Ch. 18 - How does a lessor separate lease and nonlease...

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Chapter 18 Solutions