The classification of the lease for the lessee and the accounting treatment. Given information: Lease term is 4 years. Economic life of asset is 4 years. Machine is not specialized in nature. Fair value of the asset is $450,000. Interest rate is 10% Annual lease payments are $148,000 Lessee depreciates the asset on SLM basis. Standalone price for maintenance charge is $25,000.

Question

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Answer 1

Question

Chapter 18, Problem 18.6E

a.

To determine

The classification of the lease for the lessee and the accounting treatment.

Given information:

Lease term is 4 years.

Economic life of asset is 4 years.

Machine is not specialized in nature.

Fair value of the asset is $450,000.

Interest rate is 10%

Annual lease payments are $148,000

Lessee depreciates the asset on SLM basis.

Standalone price for maintenance charge is $25,000.

b.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

c.

To determine

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.

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Answer 2

Question

Chapter 18, Problem 18.6E

a.

To determine

The classification of the lease for the lessee and the accounting treatment.

Given information:

Lease term is 4 years.

Economic life of asset is 4 years.

Machine is not specialized in nature.

Fair value of the asset is $450,000.

Interest rate is 10%

Annual lease payments are $148,000

Lessee depreciates the asset on SLM basis.

Standalone price for maintenance charge is $25,000.

b.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

c.

To determine

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.

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Answer 3

Question

Chapter 18, Problem 18.6E

a.

To determine

The classification of the lease for the lessee and the accounting treatment.

Given information:

Lease term is 4 years.

Economic life of asset is 4 years.

Machine is not specialized in nature.

Fair value of the asset is $450,000.

Interest rate is 10%

Annual lease payments are $148,000

Lessee depreciates the asset on SLM basis.

Standalone price for maintenance charge is $25,000.

b.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

c.

To determine

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.

Expert Solution & Answer

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Answer 4

Question

Chapter 18, Problem 18.6E

a.

To determine

The classification of the lease for the lessee and the accounting treatment.

Given information:

Lease term is 4 years.

Economic life of asset is 4 years.

Machine is not specialized in nature.

Fair value of the asset is $450,000.

Interest rate is 10%

Annual lease payments are $148,000

Lessee depreciates the asset on SLM basis.

Standalone price for maintenance charge is $25,000.

b.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

c.

To determine

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.

Expert Solution & Answer

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Answer 5

Chapter 18, Problem 18.6E

a.

To determine

The classification of the lease for the lessee and the accounting treatment.

Given information:

Lease term is 4 years.

Economic life of asset is 4 years.

Machine is not specialized in nature.

Fair value of the asset is $450,000.

Interest rate is 10%

Annual lease payments are $148,000

Lessee depreciates the asset on SLM basis.

Standalone price for maintenance charge is $25,000.

b.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

c.

To determine

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.

Answer 6

Chapter 18, Problem 18.6E

a.

To determine

The classification of the lease for the lessee and the accounting treatment.

Given information:

Lease term is 4 years.

Economic life of asset is 4 years.

Machine is not specialized in nature.

Fair value of the asset is $450,000.

Interest rate is 10%

Annual lease payments are $148,000

Lessee depreciates the asset on SLM basis.

Standalone price for maintenance charge is $25,000.

Answer 7

Chapter 18, Problem 18.6E

a.

To determine

The classification of the lease for the lessee and the accounting treatment.

Given information:

Lease term is 4 years.

Economic life of asset is 4 years.

Machine is not specialized in nature.

Fair value of the asset is $450,000.

Interest rate is 10%

Annual lease payments are $148,000

Lessee depreciates the asset on SLM basis.

Standalone price for maintenance charge is $25,000.

Answer 8

b.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

Answer 9

b.

To determine

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

Answer 10

c.

To determine

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.

Answer 11

c.

To determine

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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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...

To prepare: The amortization tables for the finance lease transactions. Given information: Lease term is 4 years. Fair value of the asset is $450,000. Interest rate is 10%

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term. Given information: Lease term is 3 years. Interest rate is 5% Annual lease payments are $36,272 Lessee depreciates the asset on SLM basis.

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Chapter 18 Solutions

To prepare: The amortization tables for the finance lease transactions.

Given information:

Lease term is 4 years.

Fair value of the asset is $450,000.

Interest rate is 10%

To prepare: The journal entries for the lessee and supporting amortization tables to account for this agreement over the lease term.

Given information:

Lease term is 3 years.

Interest rate is 5%

Annual lease payments are $36,272

Lessee depreciates the asset on SLM basis.