Question
In: Accounting
ACCT Corp. is a manufacturer of truck trailers. On 1 January 2020, ACCT Corp. leased a...
ACCT Corp. is a manufacturer of truck trailers. On 1 January 2020, ACCT Corp. leased a trailer to a customer under a six-year lease agreement. The following information about the lease and the trailers is provided: 1. Equal annual payments of $10 816 are due on 31 December each year. The interest rate implicit in the lease is 8%. 2. The lease can be cancelled by the customer upon payment of a penalty of $40,000. 3. There is a purchase option that the customer will be able to exercise at the end of the sixth year, for $2 000. The estimated fair value of the trailer at the end of the sixth year is $10 000. 4. The fair value of the trailer is $51,260. The cost of a trailer to ACCT Corp. is $45,000. The trailer has an expected useful life of nine years.
REQUIRED: (1) What type of lease is this for the lessor? Provide explanation and justification for your classification considering AASB 16.
(2) Prepare the journal entries for the lessor from 1 January 2020 to 31 December 2020 (the reporting period end of ACCT Corp.) to record the lease arrangement.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
ACCT Corp. is a manufacturer of truck trailers. On 1 January 2020, ACCT Corp. leased a...
ACCT Corp. is a manufacturer of truck trailers. On 1 January
2020, ACCT Corp. leased a trailer to a customer under a six-year
lease agreement. The following information about the lease and the
trailers is provided:
1. Equal annual payments of $10 816 are due on 31 December each
year. The interest rate implicit in the lease is 8%.
2. The lease can be cancelled by the customer upon payment of a
penalty of $40,000.
3. There is a purchase...
ACCT Corp. is a manufacturer of truck trailers. On 1 January 2020, ACCT Corp. leased a...
ACCT Corp. is a manufacturer of truck trailers. On 1 January
2020, ACCT Corp. leased a trailer to a customer under a six-year
lease agreement. The following information about the lease and the
trailers is provided:
1. Equal annual payments of $10 816 are due on 31 December each
year. The interest rate implicit in the lease is 8%.
2. The lease can be cancelled by the customer upon payment of a
penalty of $40,000.
3. There is a purchase...
ACCT Corp. is a manufacturer of truck trailers. On 1 January 2020, ACCT Corp. leased a...
ACCT Corp. is a manufacturer of truck trailers. On 1 January
2020, ACCT Corp. leased a trailer to a customer under a six-year
lease agreement. The following information about the lease and the
trailers is provided:
1. Equal annual payments of $10 816 are due on 31 December each
year. The interest rate implicit in the lease is 8%.
2. The lease can be cancelled by the customer upon payment of a
penalty of $40,000.
3. There is a purchase...
ACCT Corp. is a manufacturer of truck trailers. On 1 January 2020, ACCT Corp. leased a...
ACCT Corp. is a manufacturer of truck trailers. On 1 January
2020, ACCT Corp. leased a trailer to a customer under a six-year
lease agreement. The following information about the lease and the
trailers is provided: 1. Equal annual payments of $10 816 are due
on 31 December each year. The interest rate implicit in the lease
is 8%. 2. The lease can be cancelled by the customer upon payment
of a penalty of $40,000. 3. There is a purchase...
Question 3 Topic: Leases (for lessors) ACCT Corp. is a manufacturer of truck trailers. On 1...
Question 3 Topic: Leases (for lessors) ACCT Corp. is a
manufacturer of truck trailers. On 1 January 2020, ACCT Corp.
leased a trailer to a customer under a six-year lease agreement.
The following information about the lease and the trailers is
provided:
1. Equal annual payments of $10 816 are due on 31 December each
year. The interest rate implicit in the lease is 8%.
2. The lease can be cancelled by the customer upon payment of a
penalty of...
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Hayes Corp. is a manufacturer of truck trailers. On January 1,
2019, Hayes Corp. leases
trailers to Lester Company under a six-year noncancelable lease
agreement. The following
information about the lease and the trailers is provided:
1. Equal annual payments that are due on December 31 each year
provide Hayes Corp. with
an 8% return on net investment (present value factor for 6 periods
at 8% is 4.62288).
2. Titles to the trailers pass to Lester at the end of...
Sandhill Corp. is a manufacturer of truck trailers. On January 1, 2021, Sandhill Corp. leases 9...
Sandhill Corp. is a manufacturer of truck trailers. On January
1, 2021, Sandhill Corp. leases 9 trailers to Blue Company under a
5-year noncancelable lease agreement. The following information
about the lease and the trailers is provided:
1.
Equal annual payments that are due on January 1 each year
provide Sandhill Corp. with an 11% return on net investment.
2.
Titles to the trailers pass to Blue at the end of the
lease.
3.
The fair value of each trailer...
Sandhill Corp. is a manufacturer of truck trailers. On January 1, 2021, Sandhill Corp. leases 9...
Sandhill Corp. is a manufacturer of truck trailers. On January
1, 2021, Sandhill Corp. leases 9 trailers to Whispering Company
under a 5-year noncancelable lease agreement. The following
information about the lease and the trailers is provided:
1.
Equal annual payments that are due on January 1 each year
provide Sandhill Corp. with a 12% return on net investment.
2.
Titles to the trailers pass to Whispering at the end of the
lease.
3.
The fair value of each trailer...
Question: Fahad Corp. is a manufacturer of truck trailers. On January 1, 2015, Fahad Corp. leases...
Question:
Fahad Corp. is a manufacturer of truck trailers. On January 1,
2015, Fahad Corp. leases ten trailers to Lester Company under a
six-year noncancelable lease agreement. The following information
about the lease and the trailers is provided:
1. Equal
annual payments that are due on December 31 each year provide Fahad
Corp. with an 8% return on net investment (present value factor for
6 periods at 8% is 4.62288).
2.
Titles to the trailers pass to Lester at the...
Hayes Corp. is a manufacturer of truck trailers. On January 1, 2018, Hayes Corp. leases tentrailers...
Hayes Corp. is a manufacturer of truck trailers. On January 1,
2018, Hayes Corp. leases tentrailers to Lester Company under a
six-year noncancelable lease agreement. The followinginformation
about the lease and the trailers is provided:
1.Equal annual payments that are due on January 1 each year
provide Hayes Corp. with an8% return on net investment (present
value factor for 6 periods at 8% is 4.99271).
2.Titles to the trailers pass to Lester at the end of the
lease.
3.The fair...
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