ts) On January 1, 2023, KSN, Inc. signed a 7 year lease on an asset with a 10 year economic life. The lease doesn't transfer ownership or have a BPO. If the $337,095 lease payments had an initial present value of $2,104,193 and KSN, Inc.'s incremental interest rate is 4%, how much amortization expense will the company recognize on its 2023 income statement from this finance lease? & ^5) O $0 $210,419 O $337,095 O $300,599
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- On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,91018) 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.16) Ehrlich Company on January 1, 2021, enters into a 20-year noncancelable lease for equipment having an estimated useful life of 21 years and a fair value to the lessor, at the inception of the lease of $4,000,000. Ehrlich’s incremental borrowing rate is 4%. Ehrlich uses the straight-line method to depreciate its assets. The lease contains the following provisions: Rental payments of $266,000 are payable at the beginning of each year. A guaranteed residual value by Ehrlich Company for $80,000 at the expiration of the lease. Ehrlich expects to have to pay this entire amount. Instructions (a) What kind of lease is this to Ehrlich Company? Describe in detail and show your calculations as to which test(s) this lease passes. (b) What is the present value of the lease payments? (c) What journal entries would Ehrlich record during 2021 and on 1/1/2022? (Include an amortization schedule through 1/1/23 and round to the nearest dollar.)
- On January 1, 2020, Master Inc. leased new equipment to Kerr Company under a 10-year noncancelable lease, requiring $20,000 annual payments at the beginning of each year. The new equipment cost Master Inc. $144,938 and has a useful life of 12 years, with no salvage value. Title passes to Kerr at the lease expiration date. What is the rate implicit in the lease agreement? Select one: O a. 7.5% b. 10.9% c. 6.3% d. 8.0%WITH SOLUTION/COMPUTATION 52. On January 2, 2019, Ashe Company entered into a ten-year non-cancellable lease requiring year-end payments of P100,000. Ashe’s incremental borrowing rate is 12% while the lessor’s implicit interest rate, known to Ashe, is 10%. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Ashe capitalize for this leased property on January 2, 2019? a. 1,000,000 b. 614,500 c. 565,000 d. 012. Werpa Company leased equipment on January 1, 2019, with the following information: Fixed annual lease payment at the end of each year - P1,000,000 Lease term - 6 years Useful life - 8 years Implicit rate - 10% Werpa has guaranteed a P200,000 residual value on 2024 to the lessor. Assume that the fair value of the asset at the end of the lease term is P175,500, determine the amount of loss to be recognized.
- nts) Vontsira recently entered into an unguaranteed, 6 year, finance lease. The asset was recorded at $2,502,000 and has an economic life of 9 years. At the end of the lease term the asset will have a market value of $375,000. The estimated market value at the end of the asset's economic life is $150,000. At the end of the lease Vontsira will return the asset. How much depreciation expense should Vontsira record for the first year of the lease? (IFO 13) $354,500 $261,333 O $417,000 $278,000On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: January 1 Payments Effective Interest Decrease in Balance Outstanding Balance 2024 $ 244,813 2024 $ 27,000 $ 27,000 $ 217,813 2025 $ 27,000 $ 23,959 $ 3,041 $ 214,772 2026 $ 27,000 $ 23,625 $ 3,375 $ 211,397 2027 $ 27,000 $ 23,254 $ 3,746 $ 207,651 2028 $ 27,000 $ 22,842 $ 4,158 $ 203,493 2029 $ 27,000 $ 22,384 $ 4,616 $ 198,877 — — — — — — — — — — — — — — — 2041 $ 27,000 $ 10,852 $ 16,148 $ 82,505 2042 $ 27,000 $ 9,076 $ 17,924 $ 64,581 2043 $ 27,000 $ 7,104 $ 19,896 $ 44,685 2044 $ 49,600 $ 4,915 $ 44,685 $ 0 What is the asset’s residual value expected at the end of the lease term? What is the effective…8. On January 1, 2019, an entity leased a machinery for 4 years which is the same as the useful life of the machinery at annual rental or fixed payment of P120,000. The lease provides for a transfer of ownership of the underlying asset to the lessee at the end of the lease term. The implicit interest rate of the lease is 12%. (Do not round off the PVF). The lease payment is to be made at the end of each year. Determine the noncurrent portion of the lease liability at the end of 2019. (Round off final answer to whole number)
- On January 1, 2021, PokemonGo Company leased equipment to Waldo Corporation under a lease agreement that qualifies as an operating lease to Waldo. The present value of the end-of-year lease payments of $166,554 discounted at 8% is $665,000. The expected economic life of the asset is seven years. The lease term is five years. What would Waldo record as amortization in 2021?On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: January 1 Payments Effective Interest Decrease in Balance Outstanding Balance 2024 $ 244,813 2024 $ 27,000 $ 27,000 $ 217,813 2025 $ 27,000 $ 23,959 $ 3,041 $ 214,772 2026 $ 27,000 $ 23,625 $ 3,375 $ 211,397 2027 $ 27,000 $ 23,254 $ 3,746 $ 207,651 2028 $ 27,000 $ 22,842 $ 4,158 $ 203,493 2029 $ 27,000 $ 22,384 $ 4,616 $ 198,877 — — — — — — — — — — — — — — — 2041 $ 27,000 $ 10,852 $ 16,148 $ 82,505 2042 $ 27,000 $ 9,076 $ 17,924 $ 64,581 2043 $ 27,000 $ 7,104 $ 19,896 $ 44,685 2044 $ 49,600 $ 4,915 $ 44,685 $ 0 What is the lease term in years? 20 years What is the asset’s residual value expected at the end…4.. new.. Bonita Leasing Company agrees to lease equipment to Windsor Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $559,000, and the fair value of the asset on January 1, 2020, is $724,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $60,000. Windsor estimates that the expected residual value at the end of the lease term will be 60,000. Windsor amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Bonita desires a 10% rate of return on its investments. Windsor’s incremental borrowing rate is 11%, and the lessor’s implicit rate is unknown.…