The classification of lease for lessee. Given information: Lease term is 3 years. Lease doesn’t provide transfer of title. Economic life of asset is 10years. Fair value of the equipment is $9,000 Implicit interest rate is 6% Annual lease payments are $700 subject to annual increase of 15%. Lease rents are payable in the beginning. Guaranteed residual value is $7,000.

Question

Want to see the full answer?

Answer 1

Question

Chapter 18, Problem 18.21E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Guaranteed residual value is $7,000.

b.

To determine

The initial measurement of right of use asset and lease liability and preparation of amortization tables for the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

c.

To determine

To prepare: The journal entries over the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Determine the dollar value of goodwill in this acquisition of this financial accounting question

Assume Bright Star Cleaning Services had a net income of $320 for the year. The beginning total assets were $5,500, and the ending total assets were $5,100. Calculate Bright Star Cleaning Service's return on assets (ROA).

Justin Matthews is a waiter at the Duluxe Lounge. In his first weekly pay in March, he earned $300.00 for the 40 hours he worked. In addition, he reports his tips for February to his employer ($500.00), and the employer withholds the appropriate taxes for the tips from this first pay in March. Calculate his net take-home pay assuming the employer withheld federal income tax (wage-bracket, head of household), social security taxes, and state income tax (2%).

Answer 2

Question

Chapter 18, Problem 18.21E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Guaranteed residual value is $7,000.

b.

To determine

The initial measurement of right of use asset and lease liability and preparation of amortization tables for the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

c.

To determine

To prepare: The journal entries over the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 18, Problem 18.21E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Guaranteed residual value is $7,000.

b.

To determine

The initial measurement of right of use asset and lease liability and preparation of amortization tables for the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

c.

To determine

To prepare: The journal entries over the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 18, Problem 18.21E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Guaranteed residual value is $7,000.

b.

To determine

The initial measurement of right of use asset and lease liability and preparation of amortization tables for the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

c.

To determine

To prepare: The journal entries over the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 18, Problem 18.21E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Guaranteed residual value is $7,000.

b.

To determine

The initial measurement of right of use asset and lease liability and preparation of amortization tables for the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

c.

To determine

To prepare: The journal entries over the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Answer 6

Chapter 18, Problem 18.21E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Guaranteed residual value is $7,000.

Answer 7

Chapter 18, Problem 18.21E

a.

To determine

The classification of lease for lessee.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Guaranteed residual value is $7,000.

Answer 8

b.

To determine

The initial measurement of right of use asset and lease liability and preparation of amortization tables for the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Answer 9

b.

To determine

The initial measurement of right of use asset and lease liability and preparation of amortization tables for the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Answer 10

c.

To determine

To prepare: The journal entries over the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Answer 11

c.

To determine

To prepare: The journal entries over the lease term.

Given information:

Lease term is 3 years.

Lease doesn’t provide transfer of title.

Economic life of asset is 10years.

Fair value of the equipment is $9,000

Implicit interest rate is 6%

Annual lease payments are $700 subject to annual increase of 15%.

Lease rents are payable in the beginning.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

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...

Solution Summary: The author explains that lease is a long term rent agreement between two parties that is often clubbed with other clauses relating to maintenance or sale at the end of the lease period.

Concept explainers

Videos

Want to see the full answer?

Chapter 18 Solutions