The classification of the lease for both lessee and lessor. Given information: Lease term is 9 years. Lease doesn’t contain a transfer of ownership. Lease doesn’t contain a purchase option. Economic life of an asset is 9 years. Fair value of the asset is $1,349,328. Maintenance charges (general and administrative expenses) $5,600 payable at the end of each year. Implicit interest rate is 8% Annual lease payments are $200,000 due on Jan/1 each year
The classification of the lease for both lessee and lessor. Given information: Lease term is 9 years. Lease doesn’t contain a transfer of ownership. Lease doesn’t contain a purchase option. Economic life of an asset is 9 years. Fair value of the asset is $1,349,328. Maintenance charges (general and administrative expenses) $5,600 payable at the end of each year. Implicit interest rate is 8% Annual lease payments are $200,000 due on Jan/1 each year
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
Chapter 18, Problem 18.15E
a.
To determine
The classification of the lease for both lessee and lessor.
Given information:
Lease term is 9 years.
Lease doesn’t contain a transfer of ownership.
Lease doesn’t contain a purchase option.
Economic life of an asset is 9 years.
Fair value of the asset is $1,349,328.
Maintenance charges (general and administrative expenses) $5,600 payable at the end of each year.
Implicit interest rate is 8%
Annual lease payments are $200,000 due on Jan/1 each year
b.
To determine
To prepare: The amortization tables for the lease term.
Given information:
Lease term is 9 years.
Lease doesn’t contain a transfer of ownership.
Lease doesn’t contain a purchase option.
Economic life of an asset is 9 years.
Fair value of the asset is $1,349,328.
Maintenance charges (general and administrative expenses) $5,600 payable at the end of each year.
Implicit interest rate is 8%
Annual lease payments are $200,000 due on Jan/1 each year
c.
To determine
To prepare: The journal entries for the lessor for year one.
Given information:
Lease term is 9 years.
Lease doesn’t contain a transfer of ownership.
Lease doesn’t contain a purchase option.
Economic life of an asset is 9 years.
Fair value of the asset is $1,349,328.
Cost of the asset is $1,300,000.
Maintenance charges (general and administrative expenses) $5,600 payable at the end of each year.
Implicit interest rate is 8%
Annual lease payments are $200,000 due on Jan/1 each year
d.
To determine
To prepare: The journal entries for the lessee for year one.
Given information:
Lease term is 9 years.
Lease doesn’t contain a transfer of ownership.
Lease doesn’t contain a purchase option.
Economic life of an asset is 9 years.
Fair value of the asset is $1,349,328.
Maintenance charges (general and administrative expenses) $5,600 payable at the end of each year.
Implicit interest rate is 8%
Annual lease payments are $200,000 due on Jan/1 each year
Corsi Company had no beginning Work in Process inventory, completed
and transferred out were 70,000 physical units, and ending Work in
Process inventory of 7,000 physical units. Materials are added at the
beginning of the process. What is the total number of equivalent units
for materials during the period?
a. 70,000
b. 63,000
c. 7,000
d. 77,000
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