Question
In: Accounting
On January 1, 2020, Firm ABC (lessor) leased a building to Firm XYZ (lessee). The relevant...
On January 1, 2020, Firm ABC (lessor) leased a building to Firm XYZ (lessee). The relevant information related to the lease is as follows.
1) The lease arrangement is for 3 years.
2) The building’s cost and fair value at commencement of the lease is $60,000. The building is depreciated on a straight-line basis. Its estimated economic life is 5 years with salvage value of $12,000 at the end of the lease. The residual value after 5 years is assumed to be zero.
3) The lease contains no renewal options. The building reverts to Firm ABC at the termination of the lease.
4) The implicit rate of Firm ABC (the lessor) is 6% and is known by Firm XYZ.
5) Both the lessor and the lessee are on a calendar-year basis.
(a) Prepare the journal entries that Firm XYZ should make in 2020
Dates 1/1/2020, 1/1/2020, 1/1/2021, 1/1/2022
Please include Lease Payment, Interest, Reduction of Lease Liability, Lease Liability
(b) Prepare the journal entries that Firm ABC should make in 2020
Solutions
ekkarill92 answered 2 years agoRelated Solutions
2. On January 1, 2020, Firm Lessor leased a building to Firm Lessee. The relevant information...
2. On January 1, 2020, Firm Lessor leased a building to Firm
Lessee. The relevant information related to the lease is as
follows.
1) The lease arrangement is for 2 years.
2) Equal rental payments are due on January 1 of each year,
beginning in 2020.
3) The building’s fair value at commencement of the lease is
$100,000. The building is depreciated on a straight-line basis. Its
estimated economic life is 4 years with salvage value of $25,000 at
the...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor)...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from
the manufacturer, Yakima Inc. (lessor) for a 7-year period.
Pertinent information follows:
Lease term is 7 years.
The first annual payment of $30,000 is due at the inception of
the lease.
The remaining annual lease payments are all at 31 December each
year.
At the end of the lease term, Suncadia can buy the golf carts
at a price below the fair value of the golf carts.
Suncadia’s year...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor)...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from
the manufacturer, Yakima Inc. (lessor) for a 7-year period.
Pertinent information follows:
Lease term is 7 years.
The first annual payment of $30,000 is due at the inception of
the lease.
The remaining annual lease payments are all at 31 December each
year.
At the end of the lease term, Suncadia can buy the golf carts
at a price below the fair value of the golf carts.
Suncadia’s year...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from the manufacturer, Yakima Inc. (lessor)...
On January 1, 2020, Suncadia (lessee) leased 100 golf carts from
the manufacturer, Yakima Inc. (lessor) for a 7-year period.
Pertinent information follows:
Lease term is 7 years.
The first annual payment of $30,000 is due at the inception of
the lease.
The remaining annual lease payments are all at 31 December each
year.
At the end of the lease term, Suncadia can buy the golf carts
at a price below the fair value of the golf carts.
Suncadia’s year...
On 1 July 2020, Brooklyn Ltd (lessor) leased Equipment to New Ltd (lessee). The lease agreement...
On 1 July 2020, Brooklyn Ltd (lessor) leased Equipment to New
Ltd (lessee).
The lease agreement contained the following:
Annual Lease receivable on 1 July (in advance)
$50,000
Lease Receivable on 1 July 2020
– measured at NPV net of initial lease receipts
$176,992
What would be the journal entries on 1 July 2020 for the lessor
(Brooklyn Ltd)?
On 1 January 2020, Lessee Ltd entered into a two-years lease with Lessor Ltd for a...
On 1 January 2020, Lessee Ltd entered into a two-years lease
with Lessor Ltd for a equipment. The contract contains an option to
extend the lease term for a further a year. Lessee Ltd ascertained
that it is reasonably certain to exercise this option. The
equipment has a useful economic life of 10 years.
Lease payments are $25,000 per year for the initial term and
$45,000 per year for the period when the option is exercised. All
payments are due...
On January 1, 2019 Lessee Co., leased equipment from Lessor Co. The equipment had a useful...
On January 1, 2019 Lessee Co., leased equipment from
Lessor Co. The equipment had a useful life of 6 years, a fair
market value of $50,000, and a cost to Lessor Co. of $35,000.
Lessor used an implicit interest rate of 7%. The lease is for 6
years, and calls for payments of $8,497 on January 1 of each year
beginning January 1, 2019. The residual value of the equipment on
December 31, 2024 is estimated to be $10,000, and...
Question 4 On 1 January 2020, Lessee Ltd entered into a two-years lease with Lessor Ltd...
Question 4
On 1 January 2020, Lessee Ltd entered into a two-years lease
with Lessor Ltd for a equipment. The contract contains an option to
extend the lease term for a further a year. Lessee Ltd ascertained
that it is reasonably certain to exercise this option. The
equipment has a useful economic life of 10 years.
Lease payments are $25,000 per year for the initial term and
$45,000 per year for the period when the option is exercised. All
payments...
Question 4 On 1 January 2020, Lessee Ltd entered into a two-years lease with Lessor Ltd...
Question 4
On 1 January 2020, Lessee Ltd entered into a two-years lease
with Lessor Ltd for a equipment. The contract contains an option to
extend the lease term for a further a year. Lessee Ltd ascertained
that it is reasonably certain to exercise this option. The
equipment has a useful economic life of 10 years.
Lease payments are $25,000 per year for the initial term and
$45,000 per year for the period when the option is exercised. All
payments...
Mac Leasing Company (lessor) and Ash Corporation (lessee) signed a four-year lease on January 1, 2020....
Mac Leasing Company (lessor) and Ash Corporation (lessee) signed
a four-year lease on January 1, 2020. The underlying asset has an
estimated life of six years, and the property reverts to Mac at the
end of the lease term. Lease payments of $34,577 are payable on
January 1 of each year and were set to yield Mac a return of 8%,
which was known to Ash. The estimated residual value at the end of
the lease term is $29,000 and...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Draw a DFA for the following ( ∑ = {0,1}): Set of all strings with.
- In the article from Forbes notes that the goal of a leader is not to clone...
- Many people keep time using a 24 hour clock (11 is 11am and 23 is 11pm,...
- UNIX ONLY -- DIFFICULT LAB ASSIGNMENT This is an extremely difficult subject for me. Could you...
- Do you know why your credit card can be refused even though you are profitable?
- The Following Java expression: S/10 * 10 + 10 – S = C Show that this...
- Year Cash Flow 0 −$9,700 1 5,800 2 2,500 3 3,400 &nb
ADVERTISEMENT