Chapter 21, Problem 9ICA

The following events occurred during the first half of the year. Book the entries necessary for the corresponding transactions that have occurred. How do I make Journal entries for these line items? May 1: A new long-term lease is entered into for a much larger corporate office which will house the company and its future acquired company. The net present value of the future lease payments is $510,800. The lease is for six years. June 30: Book the amortization for the first half of the year on the right-of-use leased asset from May 1.

Fields Finance Ltd. (FFL), a leasing company that reports under ASPE, is in the process of preparing its financial statements for the year ended June 30, Year 1. The following leases were entered into: Lease 1: On February 1, Year 1, the company entered into a lease contract in respect of plant and machinery for a production line. The details are as follows: 12 quarterly rental payments $ 11,000 (first payment on April 30, Year 1) Period of contract 3 years (from February 1, Year 1) $200,000 Fair value of equipment (cost to FFL) Guaranteed residual value – end of lease $ 60,000 term Estimated residual value – end of useful $ 20,000 life Economic life 8 years 12% Implicit rate Lease 2: On April 1, Year 1, the company entered into a lease contract in respect of a fleet of distribution vehicles. This lease involves the following payments: Initial rental payment 10 quarterly rental payments Period of contract Fair value of equipment (cost to FFL) $190,000 Unguaranteed residual value – end…

In your audit of Entity A, you noted that the Rent expense account has an ending balance of $1,100,000 at December 31, 2021. $100,000 of this pertains to the maintenance costs paid by the Lessor on behalf of Entity A, which was later paid by Entity A. The lease commenced on January 1, 2021. The following are the terms of agreement. Terms of the Lease Agreement Lease term 8 years Useful life 10 years Annual rental payments due at the end of the year $1,000,000 Residual value at the end of useful life $500,000 Bargain purchase option 200,000 Maintenance costs reimbursed to lessor 100,000 8% Implicit rate Note: There is reasonable certainty that the purchase option will be exercised by Entity A at the end of the lease term Required: 1. Compute for the (a) initial lease liability and the cost of the right-of-use asset, (b) Depreciable amount to be used and depreciation expense (c) Carrying amount of the lease liability and the right- of-use asset at the end of the year. 2. Show adjusting…