Technoid Inc. sells computer systems. Technoid ( the lessor) leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms: • Lease payments: $2,466,754 semiannually; first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025. The present value of the lease payments is $20 million. • Lease term: five years (10 semiannual payments). • No residual vàlue; no purchase option. • Economic life of equipment: five years.
Q: for the Compute following (show your solution): 1. Total Current Assets 2. Total Non-current Assets ...
A: Balance Sheet - This Statement shows the balance of assets liabilities and Equity as at the balance ...
Q: Kaitlyn, Inc. is a manufacturer who uses a job order costing system. The data below summarizes the o...
A: Factory Overhead per Direct labor hour=Total Factory OverheadTotal direct labor hours
Q: A bond is sold at $98 of its face value ($100). Therefore, the bonds are: A) Sold at a discount beca...
A: The Bonds are source of financing which can be issued at discount or par or at premium. When Issue p...
Q: Determine whether there is a likelihood of fraudulent income based on the review of information you ...
A: As a lead forensic investigator, some information has been gathered from the internet search of Jale...
Q: h of May is as follows: FICA Social Security tax rate at 6.2%, FICA Medicare tax rate at 1.45%, fede...
A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal....
Q: Compute the firm’s predetermined overhead rate, which is based on direct-labour hours. b) Calculate...
A: "Since you have posted a question with multiple sub-parts, we will solve first three sub parts for y...
Q: Health Corporation has several current notes receivable on its year-end balance sheet. While collect...
A: Notes receivable are balance sheet items that record the value of promissory notes that a company ow...
Q: tement of changes in owners equity summarizes the effects on the capital account of the various busi...
A: Solution: The statement of changes in owners equity represents the changes in balance of equity from...
Q: Summarized data for Walrus Co. for its first year of operations ar Sales (110,000 units) $5,500,000 ...
A: Net income (NI), also known as net earnings, is calculated by subtracting sales from the cost of goo...
Q: The changes in the Cash in Bank account are reported in the statement of changes in owners equity. T...
A: Solution: Statement of changes in owner's equity is the statement that reflects various changes in o...
Q: The data provided below is the same for each item in a set of interrelated items about the FIFO appr...
A: The equivalent units are calculated on the basis of percentage of the work completed during the peri...
Q: ccounts for January, the amount to be accrued for wages would be: a. $500 b. $1 000 c. $1 500 d. $2 ...
A: Given that, For a 5 day work week, wages is $2500 That implies, for one day = $2500/5 = $500 The pay...
Q: The capital accounts for the partnership of Luke and Mark at October 31, 2022 are as follows: Luke, ...
A: Answer) Under Bonus Method, total capital of the firm post admission of new partner will be equal to...
Q: Wages Payable were P3,500 at the end of September and P2,800 at the end of October. Wages Expense fo...
A: Wages expense is the amount of expense incurred for the payment of labor.
Q: Production Data June Beginning work in process units 0 Units started into production 25,960...
A: Solution 1: Equivalent units of production (EUP) Units % material EUP-Materials % Conversion...
Q: Compton Information Services, Ic., has two service departments: human resources and billing. Compton...
A:
Q: Liabilities* return on assets current ratio asset turnover AR turnover
A: The ratio analysis helps to analyse the financial statements of the business.
Q: 10%? Provide p
A: Net Present Value = $12,118.6 Year Cash flows = CF Working capital adjustment = WC Net cas...
Q: True or false: When the parent acquired 100 percent of the subsidiary’s stock for book value duri...
A:
Q: Sawi Ak Co. acquires copyright from authors, paying advance royalties in some cases and in others, p...
A: Accrual basis: Under accrual basis accounting, revenue and expenses are recognized when they are inc...
Q: Match each description with the appropriate financial statement. A. Income Statement Reports the amo...
A: Solution: Income statement shows income and expenses during the period. Balance sheet shows Balance ...
Q: sume the following independent cases: A. At the beginning of the year, a check was issued for P400,...
A: Answer AMOUNT CASE A The cost of Land will be Cheque issued ...
Q: you to go out to the warehouse and count merchandise inventory. He said that owner is coming for a m...
A: Merchandise inventory: Merchandise inventory refers to one that examines the value of the products ...
Q: 36... Teal Leasing Company agrees to lease equipment to Flint Corporation on January 1, 2020. The f...
A: Lease is a form of agreement between two parties, in which one party provides it's asset for use to ...
Q: Should we include income derived from illegal sources in the computation of gross income? Why or why...
A: Taxes are a form of dues and obligations which needs to be paid by the individual on income earned o...
Q: Mala-Prohibita Company has annual credit purchase of P720,000 with a usual term of 3/10, net 35. The...
A: Formula: Cash discount = Annual credit purchases x Discount rate
Q: Required: Calculate the basic EPS for Pearson Ltd for the year ending 30 June 2023.
A: Earnings per shares refers to the profit earned by each shareholder after paying all the expenses of...
Q: Question 2 A Massy Company issued $4,000,000 of 10-year, 11% bonds on January 4, 2021. The bonds pa...
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for yo...
Q: what is inside money transfers? Please give examples of inside money transfers here in the Philippin...
A: Inside money transfers refer to the transfer of money from one account to another where the account ...
Q: ys operated it as a C corporation. However, at the beginning of this year, Connor made a qualifyin o...
A: b. It is required to compute the amount and nature gain that C would recognize if he received $60,00...
Q: the amount allocated to automobile loans. a. Formulate a linear programming model that can be used ...
A: *As per Bartleby guidelines, we are supposed to answer only three subparts. Kindly repost the remain...
Q: The following information is from the materials requisitions and time tickets for Job 9 completed by...
A: Answer :- step 2 in solution.
Q: What is an assessment under the income tax assessment legislation? and why are assessments importa
A: Solution Return under income tax Every person whose income is taxable as per the inc...
Q: 9.Hong Kong Clothiers reported revenue of $5,150,000 for its year ended December 31, 2021. Accounts ...
A: Formula: Cash collections from customers = December 31, 2021 revenue - December 31, 2021 receivables...
Q: Umasa Company reported rental revenue of P2,210,000 in the cash basis income tax return for the year...
A: The income statement represents the net income or net loss that is calculated by deducting the expen...
Q: Macy's was selling Calvin Klein jean shirts that were originally priced at $41.00 a. What was the am...
A: Amount of markdown is the difference between original selling price and actual selling price. Markdo...
Q: What is the depreciation charge for 2019?
A: Total Cost of building = P 8,600,000 Useful life of building = 40 years Salvage value. = P 600...
Q: The stockholders’ equity section of Day Corporation’s balance sheet at January 1 follows: Common st...
A: Stockholder's Equity - Stockholder's Equity includes the amount contributed by shareholders issued i...
Q: se that the actual level of output was 65,500 units. Prepare a e calculations.) CRANE CORPORATION Fl...
A: Total cost for 60,500 units Unit SP / Cost Sales $ 21,78,000 $ ...
Q: c. Assuming the $160,000 NOL carryover originated in 2020 and WCC elected to not carry back the loss...
A: NOL is an acronym of net operating loss which is the loss which has taken place in order words the c...
Q: Expense approach. Required: Prepare the journal entries required for 2020 using the Expense approach...
A: Journal entries refer to the process of collecting and documenting all the data of a company in its ...
Q: Discuss when a company in the extractive industries needs to start accounting for its restoration co...
A: Answer : A company in the extractive industry start accounting for its restoration costs when there ...
Q: I have done some....can you correct what i have done and complete it? Journalize the transactions...
A: Journal Entries - Journal Entries are the recording of transactions of the organization. It is recor...
Q: Calculate the final selling price to the nearest cent and markdown percent to the nearest hundredth ...
A: Answer) Calculation of Final Selling Price Selling price after final markdown = Selling price after ...
Q: ormasa Plastics has major fabrication plants in Manila and Pampanga. The president wants to know the...
A: Solution Given Annual investment (annuity) 1000000 Number of period 8 years Rate of ...
Q: Statement of Financial Position For Year Ended December 31, 2020 urrent Assets nventory Current Liab...
A: XYZ COMPANY Statement of Financial Position For the Year Ended December 31, 2020 Assets Amoun...
Q: The five criteria of lease classification in US GAAP do not include: A) The agreement specifies that...
A: Answer) option B The present value of the lease payments exceeds half of the fair value of the asset...
Q: 9.Hong Kong Clothiers reported revenue of $5,150,000 for its year ended December 31, 2021. Accounts ...
A: The Cash flow from operating activities is one of the vital part to study for any company as it tell...
Q: ABC Ltd has the following land and buildings in its financial statements as at 30 June 2022: Res...
A: You enter transaction details into your company's books to create a journal entry. In the second ste...
Q: Estrada V. Escritor sells on terms 3/10, net 30. Total sales for the year are ₱2,539,130. Forty per...
A: The average amount of receivable can be calculated by multiplying the average receivable per day by ...
The question is based on the concept of Lease Accounting.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease on January 1, 2019, for nonspecialized equipment that cost the Landlord 280,000 (useful life is 6 years with no residual value). The fair value of the equipment is 300,000. The interest rate implicit in the lease is 14%. The 6-year lease requires 6 equal annual amounts payable each January 1, beginning with January 1, 2019. Tenant pays all executory costs directly to a third party on December 1 of each year. The equipment reverts to the lessor at the termination of the lease. Assume that there are no initial direct costs. Landlord expects to collect all rental payments. Required: 1. Next Level (a) Show how landlord should compute the annual rental amounts, (b) Discuss how the Tenant Company should compute the present value of the lease payments. What additional information would be required to make this computation? 2. Next Level Prepare a table summarizing the lease and interest receipts that would be suitable for Landlord. Under what conditions would this table be suitable for Tenant? 3. Assuming that the table prepared in Requirement 2 is suitable for both the lessee and the lessor, prepare the journal entries for both firms for the years 2019 and 2020. Use the straight-line depreciation method for the leased equipment. The executory costs paid by the lessee are in 2019: insurance, 700 and property taxes, 800; in 2020: insurance, 600 and property taxes, 750. 4. Next Level Show the items and amounts that would be reported on the comparative 2019 and 2020 income statements and ending balance sheets for both the lessor and the lessee, using the change in present value approach.Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).
- Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for Sax. 2. The computers have an estimated life of 5 years, a fair value of 300,000, and a zero estimated residual value. 3. Sax agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. The annual payment is set by Appleton at 83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate. Saxs incremental borrowing rate is 10%. 6. Sax uses the straight-line method to record depreciation on similar equipment. Required: 1. Next Level Examine and evaluate each capitalization criteria and determine what type of lease this is for Sax. 2. Calculate the amount of the asset and liability of Sax at the inception of the lease (round to the nearest dollar). 3. Prepare a table summarizing the lease payments and interest expense. 4. Prepare journal entries for Sax for the years 2019 and 2020.
- Sales-Type Lease with Guaranteed Residual Value Calder Company, the lessor, enters into a lease with Darwin Company, the lessee, to provide heavy equipment beginning January 1, 2017. The lease is appropriately classified as a sales-type lease. The lease terms, provisions, and related events are as follows: The lease is noncancelable, has a term of 8 years, and has no renewal or bargain purchase option. The annual rentals are 65,000, payable at the end of each year. The interest rate implicit in the lease is 15%. Darwin agrees to pay all executory costs directly to a third party. The cost of the equipment is 280,000. The fair value of the equipment to Calder is 308,021.03. Calder incurs no material initial direct costs. Calder expects that it will be able to collect all lease payments. Calder estimates that the fair value at the end of the lease term will be 50,000 and that the economic life the equipment is 9 years. This residual value is guaranteed by Darwin. The following present value factors are relevant: PV of an ordinary annuity n = 8, i = 15% = 4.487322 PV n = 8, i = 15% = 0.326902 PV n = 1, i = 15% = 0.869565 Required: 1. Determine the proper classification of the lease. 2. Prepare a table summarizing the lease receipts and interest income earned by Calder for this lease. 3. Prepare journal entries for Calder for the years 2019, 2020, and 2021. 4. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the present value of next years payment approach to classify the lease receivable as current and noncurrent. 5. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the change in present value approach to classify the lease receivable as current and noncurrent.Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: The lease is noncancelable and has a term of 8 years. The annual rentals arc 35,000, payable at the beginning of each year. The interest rate implicit in the lease is 14%. Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for 1 at the end of the lease term, December 31, 2026. The cost of the equipment to the lessee is 150,000, and the fair value is approximately 185,100. Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Ballieu estimates that the fair value is expected to be significantly greater than 1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of 35,000 discounted at 14% is 185,090.68 (the 1 purchase option is ignored as immaterial). Required: 1. Next Level Identify the classification of the lease transaction from Ballices point of view. Give the reasons for your classification. 2. Prepare all the journal entries tor Ballieu for the years 2019 and 2020. 3. Discuss the disclosure requirements for the lease transaction in Ballices notes to the financial statements.Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms: • Lease payments: $2,466,754 semiannually; fırst payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025. Fair value of the lease payments is $20 million. • Lease term: five years (10 semiannual payments). • No residual value; no purchase option. Economic life of equipment: five years. Implicit interest rate and lessee's incremental borrowing rate: 5% semiannually. What is the interest revenue that Technoid would report for this lease in its 2021 income statement? 1. A) $0. 2. B) $1,673,820. 3. C) $876,662. 4. D) None of these answer choices is correct. O A O B O D
- Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms: • Lease payments: $2,466,754 semiannually; first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025. Fair value of the lease payments is $20 million. • Lease term: five years (10 semiannual payments). • No residual value; no purchase option. Economic life.of equipment: five years. • Implicit interest rate and lessee's incremental borrowing rate: 5% semiannually. What is the interest revenue that Technoid would report for this lease in its 2021 income statement? 1. A) $0. 2. B) $1,673,820. 3. C) $876,662. 4. D) None of these answer choices is correct. O A O B O DTechnoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $20 million. This noncancelable lease had the following terms: • Lease payments: $3,550,809 semiannually; first payment on January 1, 2024; remaining payments on June 30 and December 31 each year through June 30, 2028, • Lease term: 5 years (10 semiannual payments). • No residual value; no purchase option. • Economic life of equipment: 5 years. • Implicit interest rate and lessee's incremental borrowing rate: 10% semiannually. • Fair value of the computers on January 1, 2024: $24 million. What is the outstanding balance of the lease liability in Lone Star's balance sheet on June 30, 2024? Note: Round your answer to the nearest whole dollar. Multiple Choice $18.943.301 $18,143,310 $24,000,000 None of these answer choices is correct.What is the outstanding balance of the lease liability in Lone Star's balance sheet on June 30, 2024? Note: Round your answer to the nearest whole dollar. Multiple Choice None of these answer choices is correct. $18,243,310 $24,000,000 $18,943,301