Question
In: Accounting
Caterpillar Financial Services Corp. (a subsidiary of Caterpillar) and Sterling Construction Corp. sign a lease agreement...
Caterpillar Financial Services Corp. (a subsidiary of
Caterpillar) and Sterling Construction Corp. sign a lease agreement
dated January 1, 2017, that calls for Caterpillar to lease a
front-end loader to Sterling beginning January 1, 2017. The terms
and provisions of the lease agreement, and other pertinent data,
are as follows.
• The term of the lease is five years. The lease agreement is
non-cancelable, requiring equal rental payments at the beginning of
each year (annuity-due basis).
• The loader has a fair value at the inception of the lease of
$50,000, an estimated economic life of five years, and no residual
value of the loader at the end of the lease. Further, assume that
the underlying asset has an $42,500 cost to the dealer,
Caterpillar.
• The lease contains no renewal options. The loader reverts to
Caterpillar at the termination of the lease.
• Collectability of payment by Caterpillar is probable.
• Caterpillar sets the annual rental payment to earn a rate of
return of 4% per year (implicit rate) on its investment
Required：
1.Prepare a partial Balance Sheet for Caterpillar Finance as
December 31, 2017
2.Prepare a partial Income Statement for Caterpillar Finance
as December 31, 2017
3. Prepare journal entry to record the return of leased asset
to Caterpillar on January 1, 2022
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Caterpillar Financial Services Corp. (a subsidiary of Caterpillar) and Sterling Construction Corp. sign a lease agreement...
Caterpillar Financial Services Corp. (a subsidiary of
Caterpillar) and Sterling Construction Corp. sign a lease agreement
dated January 1, 2017, that calls for Caterpillar to lease a
front-end loader to Sterling beginning January 1, 2017. The terms
and provisions of the lease agreement, and other pertinent data,
are as follows.
• The term of the lease is five years. The lease agreement is
non-cancelable, requiring equal rental payments at the beginning of
each year (annuity-due basis).
• The loader has...
2. Caterpillar Financial Services Corp. (a subsidiary of Caterpillar) and Sterling Construction Corp. sign a lease...
2. Caterpillar Financial Services Corp. (a subsidiary of
Caterpillar) and Sterling Construction Corp. sign a lease agreement
dated January 1, 2017, that calls for Caterpillar to lease a
front-end loader to Sterling beginning January 1, 2017. The terms
and provisions of the lease agreement, and other pertinent data,
are as follows.
• The term of the lease is five years. The lease agreement is
non-cancelable, requiring equal rental payments at the beginning of
each year (annuity-due basis).
• The loader...
Illustration: Caterpillar Financial Services Corp. (a subsidiary of Caterpillar) and Sterling Construction Corp. sign a lease...
Illustration: Caterpillar Financial Services Corp. (a subsidiary
of Caterpillar) and Sterling Construction Corp. sign a lease
agreement dated January 1, Year 7, that calls for Caterpillar to
lease a front-end loader to Sterling beginning January 1, Year 7.
The terms and provisions of the lease agreement, and other
pertinent data, are as follows.
•The term of the lease is five years. The lease agreement is
noncancelable, requiring equal rental payments of $25,981.62 at the
beginning of each year (annuity-due basis)....
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the lease agreement and other important data are as follows.
The lease term is 5 years. The lease agreement is
non-cancellable, requiring equal rental payments of $20,711 at the
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title of the machine is to be passed to Branded Bhd at the end of
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ANTM Lease and BHP Ltd. sign a lease agreement dated 1
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to lease a backhoe to BHP beginning January 1, 2019. The agreement
asks ANTM Lease give
the right use of a backhoe to BHP for the periods of 1 January 2019
to 1 January 2022.
The terms and provisions of the lease agreement and other pertinent
data are as follows:
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ANTM Lease and BHP Ltd. sign a lease agreement dated 1 January 2019, that calls for...
ANTM Lease and BHP Ltd. sign a lease agreement dated 1
January 2019, that calls for ANTM
to lease a backhoe to BHP beginning January 1, 2019. The agreement
asks ANTM Lease give
the right use of a backhoe to BHP for the periods of 1 January 2019
to 1 January 2024.
The terms and provisions of the lease agreement and other pertinent
data are as follows:
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On January 1, 2020 we a sign lease agreement. It calls for annual rental payments of...
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the 3-year lease beginning on 1/1/20. The equipment has an economic
useful life of 7 years; a fair value of $7,000; a book value of
$5,000. The lessor expects a residual value of $4,500 at the end of
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is no bargain purchase option. Ownership...
Ballan Ltd entered into a non-cancellable lease agreement with Manufacturer Ltd to lease construction equipment from...
Ballan Ltd entered into a non-cancellable lease agreement with
Manufacturer Ltd to lease construction equipment from Manufacturer
Ltd under the following terms:
Lease term 9 years
Useful life of leased asset 11 years
Expected residual value at end of lease $6,000
Lease payment at inception (beginning) $7,000
Lease payments (at end of each year) $5,000 per annum (9
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Implicit interest rate for lease 11%
Fair Value of Equipment $37,031
Present Value of minimum lease payments $34,685
Ballan does not...
On January 1, 2020, Galactus Corp. (lessor) entered into a noncancellable lease agreement with Blade Corp....
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noncancellable lease agreement with Blade Corp. (lessee) for
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payments under the lease agreement, which expires on December 31,
2029, total $3,550,000. Payments of $355,000 are due each January
1. The first payment was made on January 1, 2020 when the lease
agreement was finalized. The interest rate of 10% which was...
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