Intermediate Accounting, Student Value Edition (2nd Edition)

2nd Edition

ISBN: 9780134732145

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

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Textbook Question

Chapter 18, Problem 18.8E

Classification as Finance or Operating Lease, Lessor, Journal Entries, Guaranteed Residual Value. Using the same information presented in E18-7, complete the following requirements.

Required

a. Prepare the entries for the lessor, SBE, for the first year of the lease. Determine the implicit rate
b. Would the accounting for the lessor change if a third party guarantees a residual value of $20,000 and collection of this amount is probable?
c. Prepare the amortization tables needed (if any) to account for the lease using the part (b) assumptions

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Chapter 18, Problem 18.7E

Chapter 18, Problem 18.9E

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Chapter 18 Solutions

Intermediate Accounting, Student Value Edition (2nd Edition)

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...

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Solution Summary: The author explains how journal entries are prepared for the lessor. Implicit interest rates are calculated by interpolating present values to equate with fair value of asset.

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