7Company A (lessee) has reached a lease agreement with Company B (lessor) to lease a new carpet weaving machine for five years beginning January 1, Year 1. The present value of the weaving machine is $47,945 18 The following amortization schedule was developed using the lease agreementCOMPANY ALEASE AMORTIZATION SCHEDULEANNUITY-DUE BASISAnnual LeaseCDateJanuary 1, Year 1January 1, Year 1 $10,355.57January 1, Year 2 10,355.57January 1, Year 3 10,355.57January 1, Year 4 10,355.57January 1, Year 5 10,355.57January 1, Year 6 2,500.00PaymentInterestReduction ofLease Liability$10,355.57$0.001,585.788,769.791,234.99 9,120.58870.169,485.40490.759,864.8296.15 2,403.85$54,277.83 $4,277.83$50,000.00LeaseLiabilityO Debit Inventory for $2,403; Credit Lease Receivable for $2,403Debit Lease Receivable for $2,403; Credit Inventory for $2,403O Debit Inventory for $2,500; Credit Lease Receivable for $2,500O Debit Lease Receivable for $2,500; Credit Inventory for $2,500$50,000.0039,644.4330,874.6521,754.0712,268.662,403.850.00What is the journal entry that Company B will make for this lease on January 1, Year 6?A

A lease is a contractual arrangement between two parties, known as the lessor and lessee, where the…

Company A (sse) has reached a lease agreement with Company 5 (lessor) to lease a new carpet weaving machine for five years beginning January 1, Year 1 The present value of the weaving machine is $47, 045 18 The following amortization schedule was developed using the lease agreement Date January 1, Year 1 January 1, Year 1 COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment $10,355.57 January 1, Year 2 10,355.57 January 1, Year 3 10,355.57 January 1, Year 4 10,355.57 January 1, Year 5 10,355.57 January 1, Year 6 2,500.00 $54,277.83 Interest Reduction of Lease Liability $10,355.57 $0.00 1.585.78 8.769.79 1,234.99 9,120.58 870.16 9.485.40 490.75 9.864.82 96.15 2,403.85 $4,277.83 $50.000.00 Lease Liability $50.000.00 39.644.43 30,874.65 21,754.07 12,268.66 2,403.85 0.00 What is the journal entry that Company B will make for this lease on January 1, Year 67 Debit Inventory for $2,403; Credit Lease Receivable for $2,403 O Debit Lease Receivable for $2.403; Credit Inventory for $2.403 O Debit Inventory for $2,500; Credit Lease Receivable for $2,500 Debit Lease Receivable for $2,500; Credit Inventory for $2,500

Company A (sse) has reached a lease agreement with Company 5 (lessor) to lease a new carpet weaving machine for five years beginning January 1, Year 1 The present value of the weaving machine is $47, 045 18 The following amortization schedule was developed using the lease agreement Date January 1, Year 1 January 1, Year 1 COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment $10,355.57 January 1, Year 2 10,355.57 January 1, Year 3 10,355.57 January 1, Year 4 10,355.57 January 1, Year 5 10,355.57 January 1, Year 6 2,500.00 $54,277.83 Interest Reduction of Lease Liability $10,355.57 $0.00 1.585.78 8.769.79 1,234.99 9,120.58 870.16 9.485.40 490.75 9.864.82 96.15 2,403.85 $4,277.83 $50.000.00 Lease Liability $50.000.00 39.644.43 30,874.65 21,754.07 12,268.66 2,403.85 0.00 What is the journal entry that Company B will make for this lease on January 1, Year 67 Debit Inventory for $2,403; Credit Lease Receivable for $2,403 O Debit Lease Receivable for $2.403; Credit Inventory for $2.403 O Debit Inventory for $2,500; Credit Lease Receivable for $2,500 Debit Lease Receivable for $2,500; Credit Inventory for $2,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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mpany purchaseda Problem 10-32 (IFRS) under a finance At the beginning of current year, Southstar Company leased a building with the following information: ity were originally Annual rental payable at the end of each lease year Initial direct cost paid Lease incentive received Lease bonus paid to lessor before commencement of lease Present value of cost of restoring the building as required by contract discounted at 8% Purchase option that is reasonably certain Lease term Useful life of building Implicit inierest rate Present value of an ordinary annuity of 1 at 10% for 6 periods Present value of 1 at 10% for 6 periods 1,500,000 405,000 50,000 300,000 lated depreciation and the remaining 0,000. -P1,500,000 cash. 945,000 1,000,000 6 years 10 years 10% 4.36 0.56 of the machinery 1. What amount should be recorded initially as cost of right of use asset? a. 8,750,000 b. 8,700,000 c. 9,900,000 d. 7,755,000 2. What amount should be recorded as annual depreciation of the right of the asset?…
On January 1. 2022, XYZ Lessee leased equipment from Standey Inc. Lessor, signing an Operating Lease with the folowing terms - Both the cost and the fair value of the asset for Stanley Inc. Lessor is $360,000 • Lease specifies 4 annual payments of S60,273 beginning January 1. 2022. and on each January 1 thereater trough 202s. The 4year tarm ends on December 31. 2026 - The asset's expected residual value at the end of the lease term (4 years) is $175,000, unguaranteed by the Lessee The expected useful life of the equipment is 7 years, and there is no expected residual value at the end of its useful ife There is no purchase option, and the equipment reverts back to the Lessor at the end of the 4-year period The implicit rate on the lease is 6%, and XYZ Lessee is aware of that rate. Assume Straight Line Depreciation is used on the Right of Use Asset. Present Value factors are the folowing PV of $1 79209 66506 PV of Annuity Due 3.67301 5.91732 n=7 6% Ar December 31. 2022. end of the first…
6 Company A (lessee) has reached a lease agreement with Company B (assor) to kase a new carpet weaving machine beginning January 1, Year 1. The lease agreement contains the following information • The lease is for five years, requiring annual payments of $10,355.67 at the beginning of the year. • The weaving machine has a fair value at the beginning of the lease of $50,000; an estimated economic life of five years; and a guaranteed residual value of $2,500 (Company A expects that the value will be greater). • Present value of the weaving machine is $47,945.18. • There are no renewal options. At the end of the lease, the weaving machine will be returned to Company B. • Company A depreciates similar equipment that it purchases on a straight-line basis. • Company B sels the annual lease rate al 5% and Company A is aware of the rate. • The lease is a finance lease. COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment Date January 1, Year 1 January 1, Year 1 January…
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