Rand Medical manufactures lithotripters. Lithotripsy uses shock waves in lead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,000,000 and leased it to Mid-South Urologists Group, Inc., on January 1,2016. Lease Description: Quarterly lease payments Lease term No residual value; No BPO $130,516-beginning of each period 5 years (20 quarters) The economic life of lithotripter 5 years Implicit interest rate and lessee's incremental borrowing rate 12% The fair value of asset $2,000,000 Collectability of the lease payments is reasonably assured, and there are no lessor costs yet to be incurred. Required: 1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing? Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the inception of the lease through the 2. second rental payment on April 1, 2016. Depreciation is recorded at the end of each fiscal year (December 31). Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the 3. machine at a cost of $1.7 million. Prepare appropriate entries for Rand Medical from the inception of the lease through the second lease payment on April 1, 2016.

Rand Medical manufactures lithotripters. Lithotripsy uses shock waves in lead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,000,000 and leased it to Mid-South Urologists Group, Inc., on January 1,2016. Lease Description: Quarterly lease payments Lease term No residual value; No BPO $130,516-beginning of each period 5 years (20 quarters) The economic life of lithotripter 5 years Implicit interest rate and lessee's incremental borrowing rate 12% The fair value of asset $2,000,000 Collectability of the lease payments is reasonably assured, and there are no lessor costs yet to be incurred. Required: 1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing? Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the inception of the lease through the 2. second rental payment on April 1, 2016. Depreciation is recorded at the end of each fiscal year (December 31). Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the 3. machine at a cost of $1.7 million. Prepare appropriate entries for Rand Medical from the inception of the lease through the second lease payment on April 1, 2016.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 27E

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Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2011. Edison purchased the equipment from International Machines at a cost of $112,080. Related Information: 2 years (8 quarterly periods) $15,000 at the beginning of each period 2 years $112,080 8% Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the inception of the lease through January 1, 2012. Edison's financial year ends December 31.
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $366,951. Other information: 5 years $88,000 on January 1 each year 5 years Lease term Annual payments Life of asset Fair value of asset $366,951 Implicit interest rate 10% Incrementa1 rate 10% There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.) View transaction list Journal entry worksheet 1 2 3 Record the entry at the inception of the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $334.936. Other information: 5 years $79,000 on January 1 each year 5 years Lease term Annual payments Life of asset Fair value of asset $334,936 Implicit interest rate 9% Incremental rate 9% There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.) View transaction list Journal entry worksheet 1 2 3 > Record the entry at the inception of the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $247,570. Other information: Lease term Annual payments Life of asset 4 years $71,000 on January 1 each year Incremental rate 4 years Fair value of asset Implicit interest rate 10% $247,570 10% There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2011. Edison purchased the equipment from International Machines at a cost of $112,080. Related Information: 2 years (8 quarterly periods) $15,000 at the beginning of each period 2 years $112,080 Lease term Quarterly rental payments Economic life of asset Fair value of asset 8% Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the inception off the lease through January 1, 2012. Depreciation is recorded at the end of each financial year (December 31) on a straight-line basis.
On January 01, 2012, PC Options sold equipment to PC Madness and simultaneously leased it back. Pertinent information at this date are presented below. In the initial entry upon leaseback, how much is the gain to be recognized by the buyer-lessor? * Sales price P 9,000,000 Fair value 8,000,000 Carrying amount 7,200,000 Annual rental payable at the end of each year 600,000 Remaining life 20 Lease term 4 Interest rate on the lease contract 12% Borrowing rate of PC Options 11% Borrowing rate of PC Madness 10.50% а. Р800,000 b. P720,000 O c. P400,000 O d. P717,780
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Scape Corp. manufactures hi-tech equipment. Scape leased equipment to User, Inc., on January 1, 2019. Scape manufactured the equipment at a cost of $3,700,000. Lease description: Annual rental payments $1,000,000 at beginning of each period Lease term 5 years No Bargain Purchase – Or special use at the end Implicit interest rate and lessee’s incremental borrowing rate 12% Fair value of asset Expected Life of the Asset (SL depreciation with no salvage value) $6,000,000 6 years Prepare appropriate entries for both User and Scape from the inception of the lease through the end of the first fiscal year (December 31).
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AEI Company is in the business of leasing new sophisticated equipment. At the beginning of current year, an equipment was delivered to a lessee under a direct financing lease with the following provisions: Cost of equipment 3,390,000 Annual rental payable at the end of year 600,000 Useful life and lease term 10 years Implicit interest rate 12% Present value of an ordinary annuity of 1 at 12% for 10 years 5.650 Present value of an ordinary annuity of 1 at 11% for 10 years 5.889 The entity incurred and paid initial direct costs of P143,400 in negotiating and arranging the lease. The equipment will revert to AEI Company at the end of the lease. Required: 1. Compute the…