a.
The classification of lease for lessee.
Given information:
For the year 2016,
Lease term is 6 years.
Economic life of equipment is 8 years.
Asset is not specialized in nature.
Contract does not contain a purchase option.
Fair value of the asset is $950,000.
Implicit interest rate is 8%
Annual lease payments are $190,000 due on Jan/1 each year.
b.
To prepare: The
Given information:
For the year 2016,
Lease term is 6 years.
Economic life of equipment is 8 years.
Asset is not specialized in nature.
Contract does not contain a purchase option.
Fair value of the asset is $950,000.
Implicit interest rate is 8%
Annual lease payments are $190,000 due on Jan/1 each year.
c.
To prepare: The amortization tables for the finance lease transactions.
Given information:
For the year 2016,
Lease term is 6 years.
Economic life of equipment is 8 years.
Asset is not specialized in nature.
Contract does not contain a purchase option.
Fair value of the asset is $950,000.
Implicit interest rate is 8%
Annual lease payments are $190,000 due on Jan/1 each year.
d.
To prepare: The journal entries for the lessee for end of year one and for second year payment.
Given information:
For the year 2016,
Lease term is 5 years.
Economic life of equipment is 5 years.
Contract does not contain a purchase option.
Fair value of the asset is $275,000.
Implicit interest rate is 5%
Annual lease payments are $57,900 due on Jan/1 each year.
Want to see the full answer?
Check out a sample textbook solution
Chapter 18 Solutions
Intermediate Accounting
- During the current year, a business sells equipment for $440,000. The equipment cost $290,000 when purchased and placed in service two years ago and $85,000 of depreciation deductions were allowed. The results of the sale are ____. OPTIONS: A) Ordinary income of $85,000 and Sec. 1231 gain of $150,000. B) Sec. 1231 gain of $120,000. C) Ordinary income of $90,000 and LTCL of $30,000. D) Ordinary income of $120,000. Select the correct answer✅arrow_forwardNet income using accural accounting?arrow_forwardQuick answer of this general accountingarrow_forward
- Helparrow_forwardDuring the current year, a business sells equipment for $440,000. The equipment cost $290,000 when purchased and placed in service two years ago and $85,000 of depreciation deductions were allowed. The results of the sale are ____. OPTIONS: A) Ordinary income of $85,000 and Sec. 1231 gain of $150,000. B) Sec. 1231 gain of $120,000. C) Ordinary income of $90,000 and LTCL of $30,000. D) Ordinary income of $120,000.arrow_forwardPlease give me true answer this financial accounting questionarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education