Q3 Crane Corporation is a machinery dealer whose shares trades on the TSX, and so it uses IFRS 16. Crane leased a machine to Ernst Ltd.on January 1, 2020. The lease is for a six-year period and requires equal annual payments of $24,892 at the beginning of each year.The first payment is received on January 1, 2020. Crane had purchased the machine for its inventory during 2019 for $100,500.Collectibility of lease payments is reasonably predictable, and no important uncertainties exist about costs that have not yet beenincurred by Crane. Crane set the annual rental amount to ensure an 9% rate of return. The machine has an economic life of six years,with no residual value, and reverts to Crane at the termination of the lease.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.Your answer is correct.Using time value of money tables, a financial calculator, or Excel functions, calculate the amount of each of the following: (Roundfactor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)1.Gross investment$1493522.Unearned interest income$276403.Net investment in the lease121712

Lease refers to a contract between two parties under which one party who is the real owner of an…

Your answer is correct. Using time value of money tables, a financial calculator, or Excel functions, calculate the amount of each of the following: (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) 1. Gross investment $ 149352 2. Unearned interest income $ 27640 Net investment in the lease $ 121712 3.

Your answer is correct. Using time value of money tables, a financial calculator, or Excel functions, calculate the amount of each of the following: (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) 1. Gross investment $ 149352 2. Unearned interest income $ 27640 Net investment in the lease $ 121712 3.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sheldon Cooper Inc., an equipment dealer, leased a machine to Duffy Co. on January 1, 2022. The lease is for an 8-year period and requires equal annual payments of $29,300 at the beginning of each year. The first payment is received on January 1, 2022. Sheldon Cooper Inc. had purchased the machine during 2021 for $150,000. Collectibility of lease payments by Sheldon Cooper Inc. is probable. Sheldon Cooper Inc. set the annual rental to ensure a 4% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Sheldon Cooper Inc. at the termination of the lease. Assume that Duffy Co. does not know the rate implicit in the lease used by Sheldon Cooper Inc., and Duffy’s incremental borrowing rate is 6%. In addition, assume that Duffy incurs initial direct costs of $11,000. Compute the amount of the lease liability for Duffy. Present value of an annuity due of 1 for 8 periods at 6% is 6.58238. Present value of an ordinary annuity of 1 for 8 periods at 6%…
Cullumber Company, a machinery dealer, leased a machine to Ivanhoe Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $29,169 at the beginning of each year. The first payment is received on January 1, 2025. Cullumber had purchased the machine during 2024 for $109,000. Collectibility of lease payments by Cullumber is probable. Cullumber set the annual rental to ensure a 636 rate of return. The machine has an economic life of 10 years with no residual value and reverts to Cullumber at the termination of the lease. Click here to view factor tables. (a) Your answer is correct. Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places eg. 5,275.) Amount of the lease receivable $ (b) eTextbook and Media List of Accounts Date 192,001 Prepare all necessary journal entries for Cullumber for 2025. (List all debit entries…
Sunland Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $29,928 at the beginning of each year. The first payment is received on January 1, 2020. Sunland had purchased the machine during 2019 for $150,000. Collectibility of lease payments by Sunland is probable. Sunland set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Sunland at the termination of the lease. Click here to view factor tables. (a) Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places e.g. 5,275.) Amount of the lease receivable $
Sheridan Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $31,448 at the beginning of each year. The first payment is received on January 1, 2020. Sheridan had purchased the machine during 2016 for $116,000. Collectibility of lease payments by Sheridan is probable. Sheridan set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Sheridan at the termination of the lease. Compute the amount of the lease receivable.
Cullumber Company, a machinery dealer, leased a machine to Ivanhoe Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $30,840 at the beginning of each year. The first payment is received on January 1, 2025. Cullumber had purchased the machine during 2024 for $103,000. Collectibility of lease payments by Cullumber is probable. Cullumber set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Cullumber at the termination of the lease. Suppose the collectibility of the lease payments was not probable for Cullumber. Prepare the necessary journal entry for the company in 2025. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation 1/1/25 (d) * Your…
Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on 1 January 2019. The lease is for an 8-year period and requires equal annual payments of $35,004 at the beginning of each year. The first payment is received on 1 January 2019. Crosley had purchased the machine during 2018 for $160,000. Collectibility of lease payments by Crosley is probable. Crosley set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crosley at the termination of the lease. Instructions: (a) Compute the amount of the lease receivable. (b) Prepare all necessary journal entries for Crosley for 2019. (c) Suppose the collectibility of the lease payments was not probable for Crosley. Prepare all necessary journal entries for the company in 2019. (d) Suppose at the end of the lease term, Crosley receives the asset and determines that it actually has a fair value of $1,000 instead of the anticipated…
Allied Industries manufactures high-performance conveyers that often are leased to industrial customers. On December 31, 2016, Allied leased a conveyer to Poole Carrier Corporation for a three-year period ending December 31, 2019, at which time possession of the leased asset will revert back to Allied. Equal payments under the lease are $200,000 and are due on December 31 of each year. The first payment was made on December 31, 2016. Collectibility of the remaining lease payments is reasonably assured, and Allied has no material cost uncertainties. The conveyer cost $450,000 to manufacture and has an expected useful life of six years. Its normal sales price is $659,805. The expected residual value of $150,000 at December 31, 2019, is guaranteed by United Assurance Group. Poole Carrier’s incremental borrowing rate and the interest rate implicit in the lease payments are 10%. Required: 1. Show how Allied Industries calculated the $200,000 annual lease payments. 2. How should this lease…
Wildhorse Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $30,384 at the beginning of each year. The first payment is received on January 1, 2020. Wildhorse had purchased the machine during 2019 for $130,000. Collectibility of lease payments by Wildhorse is probable. Wildhorse set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Wildhorse at the termination of the lease. (a.) Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Amount of the lease receivable $ (b.) Prepare all necessary journal entries for Wildhorse for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal…
Cullumber Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $29,169 at the beginning of each year. The first payment is received on January 1, 2020. Cullumber had purchased the machine during 2019 for $109,000. Collectibility of lease payments by Cullumber is probable. Cullumber set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Cullumber at the termination of the lease. Prepare all necessary journal entries for Cullumber for 2020.
Pharoah Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $31,296 at the beginning of each year. The first payment is received on January 1, 2020. Pharoah had purchased the machine during 2016 for $116,000. Collectibility of lease payments by Pharoah is probable. Pharoah set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Pharoah at the termination of the lease. Compute the amount of the lease receivable Prepare all necessary journal entries for Pharoah for 2020. Suppose the collectibility of the lease payments was not probable for Pharoah. Prepare the necessary journal entry for the company in 2020. Suppose at the end of the lease term, Pharoah receives the asset and determines that it actually has a fair value of $1,170instead of the anticipated residual value of $0. Record the…
Sub Zero, Inc., an equipment manufacturer, leased a freezer to CommercialKitchen Company on January 1, 2019. The lease is for a 6-year period and requiresequal annual payments of $42,061.33 at the beginning of each year.The first payment is received on January 1, 2019. Sub Zero manufactured thefreezer during late 2018 and has carried it in finished goods inventory at a cost of$162,500. Collectability of lease payments is reasonably predictable, and noimportant uncertainties surround the amount of costs yet to be incurred by SubZero.Sub Zero set the annual rental to ensure an 8% rate of return. The freezer has aneconomic life of 8 years with no residual value and reverts back to Sub Zero at thetermination of the lease.Required:(a) Compute the amount of lease receivable; round to the nearest whole dollar.(b) Prepare all necessary journal entries on Sub Zero’s books for 2019 and 2020;again, round to the nearest whole dollar.
Sheridan Company, a machinery dealer, leased a machine to Sunland Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $31,448 at the beginning of each year. The first payment is received on January 1, 2025. Sheridan had purchased the machine during 2024 for $116,000. Collectibility of lease payments by Sheridan is probable. Sheridan set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Sheridan at the termination of the lease. Click here to view factor tables. (a) Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Amount of the lease receivable $