P21.8 (LO 2, 4) (Lessee Computations and Entries, Lease with Guaranteed Residual Value) Assume the same data as in P21.7 and that Chambers Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of R$10,000. Instructions a. Compute the amount of the initial lease liability. b. Prepare a 1o-year lease amortization schedule. c. Prepare all of the lessee's journal entries for the first year. d. Suppose Chambers Medical Center incurred R$7,000 of document preparation costs after the execution of the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?
Q: 18. How much is the income of Tours4fun after taking into account all transactions? O 14,800 O 15,80...
A: Journal means the book of prime entry where all entries are recorded in different pages. Ledger mean...
Q: a. Prepare the lease amortization schedule(s) for Donahue for all 4 years of the lease. b. Prepare t...
A: Rauch AG leases a piece of equipment to Donahue SA on Jan 01, 2022. Annual lease payments is 4892 at...
Q: Sensible Company provided the following ledger account of the cash in bank maintained with Second Ba...
A: The bank reconciliation statement is prepared to equate the balances of cash book and passbook with ...
Q: xercise 12. Account Debited and Account Credited nstruction: For each transaction, identify the acco...
A: Increase in asset is Debited. Increase in liabilities is Credited. Increase in Revenue is Credited. ...
Q: The Work in Process Inventory account for DG Manufacturing follows Compute the cost of jobs complete...
A: Total manufacturing costs including Beginning work in process inventory = Beginning work in process ...
Q: pping per order. So, now you can make some calculations The variable costs come to $75. You had an a...
A: Here given the details of the advertisement which are given in the internet which can be generated s...
Q: Assume that sales and expenses forecasts for months April, May, June, and July are as follows. 20% ...
A: Cash Budget: A cash budget plan is a report delivered to assist a business with dealing with their i...
Q: please help me understand how to calculate this problem
A: Variable Cost - The total cost of production of a good comprises of the total fixed cost of producti...
Q: What is the amount of the deferred tax liability at the end of 2021
A: Deferred tax liability refers to those tax liabilities of a company which is recorded in the balance...
Q: During May, Bergan Company incurred factory overhead costs as follows: indirect materials, $8,800; i...
A: Factory Overhead: A manufacturing business's factory overhead, sometimes referred to as manufacturin...
Q: What is the Acid-test ratio of Nezuko Inc
A: Lets understand the basics. Acid test ratio is also known as quick ratio. It is ratio which indicate...
Q: The assets and liabilities of Matt Wesley Auto Shop are as follows: Cash, $10,000; Accounts receivab...
A: Accounting equation says that total assets should always be equals to total liabilities and equity ....
Q: Luau Company issues 5,000 shares of restricted stock to its CFO, Sasha Fierce, on January 1, 2020. T...
A: Number of shares issued = 5000 shares Fair value of stock ( on the date of purchase ) = $ 148000 Ser...
Q: Using the data in the following table, how much bond amortization was recorded for the 4th interest ...
A: Lets understand the basics. When bond is issued at premium then premium needs to amortized either th...
Q: 1. Winston Corporation purchases all of Harley Company’s stock on June 1 for P1,200,000. At that da...
A: In the consolidation worksheet, eliminating entries are utilized to alter the totals of the individu...
Q: A company bought an equipment costing AED 200,000. How much will the company makes in profit every y...
A: solution Given cost of equipment =200000 interest rate =6% To recover the expense the present valu...
Q: Windsor Inc., a greeting card company, had the following statements prepared as of December 31, 2020...
A: Cash flow statement represents the cash inflow and cash outflow due to the operating, inventing, and...
Q: A resident citizen taxpayer sold a vacant lot (held as investment) in the Philippines. Other data re...
A: The capital gains tax is a tax levied just on profit made on a sale of an investment. When you sell ...
Q: Riverbed Corp. uses the direct method to prepare its statement of cash flows. Riverbed trial balance...
A: Disclaimer: “Since you have posted a question with multiple sub-parts, we will solve first three sub...
Q: The total assets and the total liabilities of Paragon Services are shown below. During the year, no ...
A: Accounting equation says that total assets should always be equals to total liabilities and equities...
Q: The Trump tax changes (i.e., the TCJA) allows deductions (either as a FOR or FROM AGI Deduction) for...
A: The following are allowed deductions: 1. Casualty losses on personal use asset in declared disaster ...
Q: he following events occurred in Fresh Cleaning Company in December 2021: (1) A customer has purchase...
A: Accounting principles are those rules and regulations that a business entity must adhere to while re...
Q: Sparkling Beverages makes one of its products by way of three separate stages. Details of production...
A: The term "process accounting" refers to a procedure in which raw materials are added to several proc...
Q: Condensed financial data of Novak Company for 2020 and 2019 are presented below. NOVAK COMPANY COMP...
A: The cash flow statement (CFS) is a financial statement that summarizes the flow of cash and cash equ...
Q: 1.06 $254,511,000 P239,957,000 Current Ratio 1.26 Current Assets 9248,357,000 Current Liabilities $1...
A: Financial ratio analysis helps the investors in interpreting the company’s overall performance from ...
Q: 1. A loan of Php 35,000 with a simple interest rate of 12% will be paid within 9 months. interest wi...
A: As posted multiple independent questions we are answering only first question kindly repost the unan...
Q: Bramble Inc., had the following condensed balance sheet at the end of operations for 2019. BRAMBLE ...
A: Cash flow statement includes: Cash flows from Operating activities Cash flows from investing activi...
Q: What is the purpose of emergency fund?
A: Emergency Fund: An emergency fund is a vital corpus that must be set up in case of unforeseen circum...
Q: During May, Bergan Company accumulated 2,500 hours of direct labor costs on Job 200 and 3,000 hours ...
A: Total Labor Cost for Job 200 = Labor Hours x Direct labor rate Total Labor Cost for Job 305 = Labor ...
Q: Carol Gaston opens her own law office on July 1, 2019. During the first month of operations, the fol...
A: The balance sheet represents the financial position that involves the assets, liabilities, and stock...
Q: 2019 2020 Assets Cash & Short Investments Accounts Receivable Inventories Other Current Assets TOTAL...
A: A statement which is used to compare item by item in a horizontal line for two years, is known as co...
Q: Transactions 1. On March 1, 20– when he began his business, he invested in the business a bank balan...
A: A T-Account is a log or list of accounts that keep track of account transfers.
Q: What is accounting
A: Generally Accepted Accounting Principles (GAAP): A definitive objective of GAAP is to guarantee an o...
Q: E21.12 (LO 2, 3, 4) (Lessee-Lessor Entries, Sales-Type Lease with Bargain Purchase Option) On Januar...
A: Note: Only d,e,f are being answered as required. d. If the collectibility of lease payments is not...
Q: Which of the following is NOT included in the financial assets? A. Cash. B. Investments in securitie...
A: The financial assets include the liquid assets of the business.
Q: Instruction: Prepare the following 1. Income Statement 2. Statement of Changes in Equity 3. Statemen...
A: Financial statements refers to the statement which includes BS (Balance Sheet), income statement (IS...
Q: Required information [The following information applies to the questions displayed below.] Daniel Co...
A: The question is based on the concept of Cost Accounting.
Q: Paragon Company Income Statements For the Years Ended December 31 20Y6 $1,300,000 20Y7 Fees earned $...
A: Formula: Increase/ decrease in amount = 20Y7 Amount - 20Y6 Amount Increase / Decrease in Percentage ...
Q: Nezuko Inc. Statement of Comprehensive Income For the Year Ended December 31, 2020 (Expressed in mil...
A: The asset turnover of an entity is calculated by dividing the total turnover of the company by the t...
Q: A man deposited Php 20,000 in a savings bank that pays 4 ½% compounded semi-annually for 2 years and...
A: Deposited amount (P) = Php 20,000 Interest rate = 4 1/2% = 4.50% Semi annual interest rate (r) = 4.5...
Q: P18-1 Trend analysis and return on common equity [20–30 min] Net sales revenue, profit and ordinary ...
A: Trend analysis shows changes in the financial statement values of a certain year relative to a base ...
Q: 3. Calculate the IRR for Large Expansion 4. Calculate the IRR for Medium Expansion 5. Calculate the ...
A: Solution Note : Dear student as per the Q&A guideline we are required to answer the first three ...
Q: The entity projected the estimated warranty cost as a percent of sales. First year of warranty 4% ...
A: Under the expense as incurred approach, expenses are recorded as when incurred. Under the accrual" ...
Q: Instruction: Prepare the following 1. Income Statement 2. Statement of Changes in Equity 3. Statemen...
A: The financial statements of the business includes the income statement, statement of shareholders' e...
Q: Tinkiwinki Inc., corporation, has the following pertinent information happened during year 2022 Cash...
A: The cash flow statement is prepared to record the cash flow from various activities such as operatin...
Q: Income Statements For the Years Ended December 31 20Y7 20Υ6 Fees earned Expenses $1,534,000 $1,300,0...
A: Horizontal analysis means where the analysis is made with regard with two different period where as ...
Q: Question 2. Debackere Construction Corp. contracted with Aggretsuko Inc. to build a karaoke machine ...
A: Contract costing refers to identifying costs related to a contract with a customer and recognizing r...
Q: PLEASE ANSWER THIS QUESTION ASAP. THANK YOU SO MUCH. In connection with your audit of the financial...
A: Solution Ordinary shares are the stocks sold on a public exchange . Each share of a stock generally ...
Q: All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs ...
A: A trade or investment's breakeven point (break-even price) is determined by comparing an asset's mar...
Q: Q.1 A) A Company need Rs. 31,25,000 for the construction for new plant the following three plans are...
A: The capital structure of a company states how much capital is invested in the different types of fin...
P21-8. Please answer P21-8, part a,c,d. Note that in part (d), they ask for both LEASE LIABILITY and RIGHT OF USE ASSET. Please show all workings clearly.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- (Lessor Computations and Entries, Sales-Type Lease with Guaranteed Residual Value) Amirante Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is $411,324, and its guaranteed residual value at the end of the noncancelable lease term is estimated to be $15,000. The hospital will pay rents of $60,000 at the beginning of each year and all maintenance, insurance, and taxes. Amirante Inc. incurred costs of $250,000 in manufacturing the machine and $14,000 in negotiating and closing the lease. Amirante Inc. has determined that the collectibility of the lease payments is reasonably predictable, that there will be no additional costs incurred, and that the implicit interest rate is 10%.Instructions(a) Discuss the nature of this lease in relation to the lessor and compute the amount of each of the following items.(1) Lease receivable at inception of the lease.(2) Sales…Cullumber Company has a machine with a cost of $651000 which also is its fair value on the date the machine is leased to Park Company. The lease is for 6 years and the machine is estimated to have an unguaranteed residual value of $64000. If the lessor’s interest rate implicit in the lease is 12%, the 6 beginning-of-the-year lease payments would be 127,476 108,500 134,333 141,375East Company leased a new machine from North Company on January 1, 2021 under a lease with the following information:Annual rental payable at the beginning of each lease year P 400,000Lease term 10 yearsUseful life of the machine 12 yearsImplicit interest rate 14%Incremental borrowing rate of the lessee 12%Initial direct costs 100,000East Company has the option to purchase the machine on January 1, 2031 by paying P500,000 which approximates the expected fair value of the machine on the option exercise date. 1. At the commencement of the lease, what amount should be recognized as finance lease liability? 2. What would be the carrying amount of the leased asset in the records of East Company as of December 31, 2023? 3. The balance of the finance lease liability as of December 31, 2024 is:
- An operating lease has unequal payments over the lease term. During the first year, the payment is $14,000; total payments over the five-year lease term are $120,000. Based on the present value of the total lease payments and the implicit interest rate, interest expense incurred during the first year is $6,000. Amortization of the right-to-use asset for year 1 should be: Multiple Choice $0 $8,000 $20,000 $24,000Which of the following lease arrangements would most likely be accounted for as a finance lease by the lessor if it is under US GAAP instead of IFRS? a. The lease agreement runs for 15 years and the economic life of leased property is 20 years. However, the title is not transferred to the lessee at the end of the lease term. b. The present value of future payments is P73,600 when the fair value of the property is P80,000 at the end of the first lease year. c. The lessee shoulders the gain or loss from fluctuation in the fair value of the underlying asset. d. The lessee may renew the two-year lease for two additional years; originally the lease payments were P10,000 monthly. Renewed lease term calls for P11,000 monthly rental payment.Delray Leasing Company signs an agreement on January 1, 2025, to lease equipment to Sheridan Company. The following information relates to this agreement. Assume that the expected residual value at the end of the lease is $27,400, such that the payments are $22,227.36. 1. 2. 3. 4. 5. 6. The term of the non-cancelable lease is 4 years with no renewal option. The equipment has an estimated economic life of 6 years. The fair value of the asset at January 1, 2025, is $105,300. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $27,400, none of which is guaranteed. The agreement requires equal annual rental payments of $22,227.36 to the lessor, beginning on January 1, 2025. The lessee's incremental borrowing rate is 6%. The lessor's implicit rate is 5% and is unknown to the lessee. Sheridan uses the straight-line depreciation method for all equipment. Date Account Titles and Explanation (To record the lease) (To…
- On January 1, 2022, Edward Corporation (lessor) enters into a ten-year lease of equipment to Kirk Corporation (lessee). The equipment has estimated useful life of 15 years. Lease payments are P380,000 per year all payable at the beginning of each year. The fair value of the leased asset on this date P3.132.161. The rate implicit in the lease is 6%. Kirk Guaranteed a residual value of P300,000. 8. How much interest income should Edward recognized in its December 31, 2022 statement of comprehensive income? 165,130 111,968 139,186 125,942 15. Assuming that the lease is a sales type lease and the cost of the asset is P2.500,000 and the residual value is unguaranteed, how much is the balance of lease receivable as of December 31, 2022 and the gross profit? P2,686,921 and P799,681 P2,917,291and P632,161 P2,739,722 and P799,681 P2,955,789 and P632,16118. Which of the following lease arrangements would most likely be accounted for as a finance lease by the lessor if it is under US GAAP instead of IFRS? * a. The lease agreement runs for 15 years and the economic life of leased property is 20 years. However, the title is not transferred to the lessee at the end of the lease term. b. The present value of future payments is P73,600 when the fair value of the property is P80,000 at the end of the first lease year. c. The lessee shoulders the gain or O loss from fluctuation in the fair value of the underlying asset. d. The lessee may renew the two- year lease for two additional years; originally the lease payments were P10,000 monthly. Renewed lease term calls for P11,000 monthly rental payment.18) The Thomson Company (lessee) leased equipment from Columbus Industries on January 1, 2021. Columbus(lessor) manufactured the equipment at a cost of $270,000. Other information: Lease term Annual payments Life of asset Lessor's implicit interest rate Lessee's incremental rate 3 years $120,000 beginning Jan. 1, 2021 3 years 8% 9% Required: Round your answers to the nearest whole dollar amounts. 1. Calculate the amount of lease receivable that Columbus would report in this sales-type lease. Round to nearest dollar. Show calculations. If not, no credit. 2. Prepare the appropriate journal entries for Columbus on January 1, 2021. Round to nearest dollar. 3. Prepare the adjusting journal entry for Columbus on December 31, 2021. Round to nearest dollar.
- On December 31, 2022, Day Company leased a new machine from Parr with the following pertinent information: Lease term 6 years 500,000 8 years 12% Annual rental payable in beginning of each year Useful life of machine Implicit interest rate in lease Present value of an annuity of 1 in advance for 6 periods at 12% Present value of an ordinary annuity of 1 for 6 periods at 12% 4.60 4.11 The lese is not renewable, and the machine reverts to Parr at the termination of the lease. The cost of the machine on Parr's accounting records is P3,755,000. At the beginning of the lease term, Day should record a lease liability of a. 2,055,000 b. 2,300,000 c. 3,755,000 d. 2,800,000On August 1, 2020, ABC Company leased a machine to XYZ company for six years requiring payments of P100,000 at the beginning of each lease year. The machine cost P470,000, which is the fair value at the inception of the lease. ABC company has the option to purchase the machine for P5,000 which is significantly lower than the expected fair value of the machine at lease expiration date. ABC company incurred an initial direct cost of P3,000. The interest rate implicit in the lease is 10%. ABC appropriately recorded the lease as a direct financing lease. How much total financial revenue would ABC Company earned over the term of the lease? A. P125,000 B. P130,000 C. P132,000 D. P135,000The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 18,500 Year 2: $ 23,500 Year 3: $ 28,500 Year 4: $ 33,500 An appropriate discount rate is 7 percentage, yielding a present value of $86,637. b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset? b-2. If the lease is a finance lease, what will be the initial value of the lease liability? b-3. If the lease is a finance lease, what will be the lease expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.) b-4. If the lease is a finance lease, what will be the interest expense shown on the income statement at the end of year 1? (Round your answer to the nearest dollar amount.) b-5. If the lease is a finance lease, what will be the amortization expense shown on the income statement at the end of year 1? (Round your answer to…