Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset. Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale. Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor. Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value. Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset. Part 1 (a) To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

Question

Want to see the full answer?

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 21, Problem 4CA

To determine

Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset.

Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale.

Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor.

Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value.

Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset.

Part 1 (a)

To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

To determine

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

To determine

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

To determine

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

To determine

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Novak supply company a newly formed corporation , incurred the following expenditures related to the land , to buildings, and to machinery and equipment. abstract company's fee for title search $1,170 architect's fee $7,133 cash paid for land and dilapidated building thereon $195,750 removal of old building $45,000 LESS: salvage $12,375 $32,625 Interest on short term loans during construction…

Year Cash Flow 0 -$ 27,000 1 11,000 2 3 14,000 10,000 What is the NPV for the project if the required return is 10 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV $ 1,873.28 At a required return of 10 percent, should the firm accept this project? No Yes What is the NPV for the project if the required return is 26 percent?

The following were selected from among the transactions completed by Babcock Company during November of the current year: Nov. 3 Purchased merchandise on account from Moonlight Co., list price $85,000, trade discount 25%, terms FOB destination, 2/10, n/30. 4 Sold merchandise for cash, $37,680. The cost of the goods sold was $22,600. 5 Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice. 6 Returned merchandise with an invoice amount of $13,500 ($18,000 list price less trade discount of 25%) purchased on November 3 from Moonlight Co. 8 Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the goods sold was $9,400. 13 Paid Moonlight Co. on account for purchase of November 3, less return of November 6. 14 Sold merchandise with a list price of $236,000 to customers who used VISA and who redeemed $8,000 of pointof- sale coupons. The cost…

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 21, Problem 4CA

To determine

Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset.

Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale.

Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor.

Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value.

Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset.

Part 1 (a)

To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

To determine

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

To determine

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

To determine

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

To determine

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 21, Problem 4CA

To determine

Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset.

Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale.

Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor.

Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value.

Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset.

Part 1 (a)

To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

To determine

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

To determine

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

To determine

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

To determine

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 21, Problem 4CA

To determine

Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset.

Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale.

Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor.

Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value.

Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset.

Part 1 (a)

To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

To determine

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

To determine

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

To determine

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

To determine

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 21, Problem 4CA

To determine

Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset.

Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale.

Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor.

Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value.

Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset.

Part 1 (a)

To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

To determine

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

To determine

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

To determine

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

To determine

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Answer 6

Chapter 21, Problem 4CA

To determine

Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset.

Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale.

Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor.

Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value.

Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset.

Part 1 (a)

To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

Answer 7

Chapter 21, Problem 4CA

To determine

Lease: A contractual arrangement between the owner of the asset and the user of the asset for a fixed amount of money is termed lease. In this contract the owner of the asset permits the user to use the property for a fixed sum of money received at the time of handing over the asset. At the end of the contract tenure the user of the asset need to return the asset to the owner. The parties involved in the contract are termed the lessor the owner of the asset and the lessee the user of the asset.

Capital lease method: A process of using the asset for a rental payable in installments along with interest and gets the ownership of the title at the end of the lease contract is termed capital lease. In this, the owner of the asset or the lessor need not bear expenses like depreciation, insurance, maintenance and repair. All these expenses need to be paid by the lessee. In a nutshell, capital lease is like an installment sale.

Operational lease method: A process of using the asset for a rental payable in installments or in bulk without transfer of ownership of the asset is termed operation lease. The lessee has to return back the asset once the tenure of lease is over. The expenses like insurance, maintenance and repair expenses are borne by the lessor.

Direct finance leasing: An agreement created between the non manufacturer and a lessee who use the asset merely for the interest receivable is termed the direct finance lease. In this arrangement the lessor provides finance to the lessee and leases the asset to the lessee. The income receivable by the lessor is the interest payable for the leased asset value.

Sale type leasing: An agreement created between the lessor and lessee for an amount higher than the cost of the asset leased is termed sale type lease. In this type of lease the amount payable for lease includes the profit which the lessor wishes to include. The agreement should end with the transfer of ownership and the lease tenure should be at least 75% of the life of the leased asset.

Part 1 (a)

To determine the way in which lease inception, first year lease payment and transfer of ownership after lease is recorded by the lessee in capital lease.

Answer 8

To determine

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

Answer 9

To determine

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

Answer 10

To determine

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

Answer 11

To determine

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

Answer 12

To determine

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

Answer 13

To determine

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

Answer 14

To determine

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Answer 15

To determine

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 19

Ch. 21 - Prob. 1Q Ch. 21 - 2. Bradley Co. is expanding its operations and is...Ch. 21 - Prob. 3Q Ch. 21 - Prob. 4Q Ch. 21 - Prob. 5Q Ch. 21 - 6. Explain the distinction between a...Ch. 21 - Prob. 7Q Ch. 21 - Prob. 8Q Ch. 21 - 9. Identify the lease classifications for lessors...Ch. 21 - Prob. 10Q

Part 1 (b) To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

Part 2 (a) To determine the lease receivable in direct finance lease and sale type lease.

Part 2 (b) To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

Part 2 (c) To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.

Want to see the full answer?

Chapter 21 Solutions

Part 1 (b)

To determine the way in which lease inception and first year lease payment is recorded in case the lease payment is same and if the lease payment is different on all installments in operational lease.

Part 2 (a)

To determine the lease receivable in direct finance lease and sale type lease.

Part 2 (b)

To determine the way through which the interest revenues are recognized in direct finance lease and sale type lease.

Part 2 (c)

To determine the details regarding the manufacturer or dealer profit in sale type and direct finance lease.