a.
The classification of lease for lessee.
Given information:
Lease term is 7 years.
Economic life of equipment is 10 years.
Fair value of the asset is $1,700,479.
Carrying value of asset is $1,500,000.
Residual value guaranteed by third party is $100,000.
Interest rate is 9%
Annual lease payments are $300,000 due on Jan/1 each year
b.
To prepare: Amortization tables for the lease term.
Given information:
Lease term is 7 years.
Economic life of equipment is 10 years.
Fair value of the asset is $1,700,479.
Carrying value of asset is $1,500,000.
Residual value guaranteed by third party is $100,000.
Interest rate is 9%
Annual lease payments are $300,000 due on Jan/1 each year
c.
To prepare: The journal entries for the lessee.
Given information:
Lease term is 5 years.
Economic life of equipment is 8 years.
Fair value of the asset is $650,000.
Carrying value of asset is $650,000.
Residual value guaranteed by third party is $100,000.
Initial direct cost to lessee is $10,000.
Interest rate is 10%
Lessor is certain about receipt of lease payments and residual value.
Annual lease payments are $120,000 due on Jan/1 each year
d.
To prepare: The journal entries for the lessee.
Given information:
Lease term is 5 years.
Economic life of equipment is 8 years.
Fair value of the asset is $650,000.
Carrying value of asset is $650,000.
Residual value guaranteed by third party is $100,000.
Initial direct cost to lessee is $10,000.
Interest rate is 10%
Lessor is certain about receipt of lease payments and residual value.
Annual lease payments are $120,000 due on Jan/1 each year
e.
The classification of lease for lessor.
Given information:
Lease term is 7 years.
Economic life of equipment is 10 years.
Fair value of the asset is $1,700,479.
Carrying value of asset is $1,500,000.
Residual value guaranteed by third party is $100,000.
Interest rate is 9%
Annual lease payments are $300,000 due on Jan/1 each year
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Chapter 18 Solutions
Intermediate Accounting
- Florida Kitchens produces high-end cooking ranges. The costs to manufacture and market the ranges at the company’s volume of 3,000 units per quarter are shown in the following table: Unit manufacturing costs Variable costs $ 1,440 Fixed overhead 720 Total unit manufacturing costs $ 2,160 Unit nonmanufacturing costs Variable 360 Fixed 840 Total unit nonmanufacturing costs 1,200 Total unit costs $ 3,360 The company has the capacity to produce 3,000 units per quarter and always operates at full capacity. The ranges sell for $4,000 per unit. Required: a. Florida Kitchens receives a proposal from an outside contractor, Burns Electric, who will manufacture 1,200 of the 3,000 ranges per quarter and ship them directly to Florida’s customers as orders are received from the sales office at Florida. Florida would provide the materials for the ranges, but Burns would assemble, box, and ship the ranges. The variable manufacturing costs would be…arrow_forwardCan you please solve this general accounting problem?arrow_forwardCompute the return on total assets of this financial accounting questionarrow_forward
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