Question

In: Accounting

Elf Leasing purchased a machine for $410,000 and leased it to IGA, Inc. on January 1,...

Elf Leasing purchased a machine for $410,000 and leased it to IGA, Inc. on January 1, 2018.

Lease description:
Quarterly rental payments $23,504 at beginning of each period
Lease term 6 years (24 quarters)
No residual value; no BPO
Economic life of machine 6 years
Implicit interest rate and lessee’s incremental borrowing rate 12%
Fair value of asset $410,000


Required:
Prepare appropriate entries for both IGA and Elf Leasing from the beginning of the lease through the second rental payment on April 1, 2018. Amortization is recorded at the end of each fiscal year (December 31)

Solutions

Expert Solution

Journal Entries in both lessor and lessee books are given for the year 2018. I.e. 1st year. Query if any please share in comment.

1. For IGA

2. For ELF

Working Notes

1: amortization table

Amortization Per Annum

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Elf Leasing purchased a machine for $420,000 and leased it to IGA, Inc. on January 1,...
Elf Leasing purchased a machine for $420,000 and leased it to IGA, Inc. on January 1, 2018. Lease description: Quarterly rental payments $27,408 at beginning of each period Lease term 5 years (20 quarters) No residual value; no BPO Economic life of machine 5 years Implicit interest rate and lessee’s incremental borrowing rate 12% Fair value of asset $420,000 Required: Prepare appropriate entries for both IGA and Elf Leasing from the beginning of the lease through the second rental payment...
Fieldman Company purchased a machine for leasing purposes on January 1, 2020, for $1,500,000. The machine...
Fieldman Company purchased a machine for leasing purposes on January 1, 2020, for $1,500,000. The machine has a 10-year life, has no residual value, and will be depreciated on a straight-line basis. On January 2, 2020, Fieldman leased the machine to Dahlia Company for $150,000 a year for a five-year period ending December 31, 2024. Dahlia does not guarantee a residual value of the machine at lease-end, although Dahlia can purchase the machine at the end of the lease term...
ASD Company leased equipment from ZXC Leasing Company on January 1, 2017. ZXC Leasing Company purchased...
ASD Company leased equipment from ZXC Leasing Company on January 1, 2017. ZXC Leasing Company purchased the equipment from QWE Company at a cost of $85,000 and added the equipment to its inventory of items available for lease. Additional details of the lease are as follows. Quarterly lease payments $15,000 Lease term 2 years Asset's useful life 6 years Asset's fair value at date of inception $113,000 Purchase option lessee is reasonably certain to exercise No Title transfer after lease...
On January 1, 2018, Morris Production leased a machine from Werner Leasing under a finance lease....
On January 1, 2018, Morris Production leased a machine from Werner Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Morris. Portions of the Werner Leasing's lease amortization schedule appear below: Jan. 1 Payments Effective Interest Decrease Outstanding in Balance Balance 374,596 2018 40,000 40,000 334,596 2018 40,000 33,460 6,540 328,056 2019 40,000 32,806 7,194 320,861 2020 40,000 32,086...
Part 2 (Application) On January 1, 2017, a machine was purchased for $400,000 by Younger Leasing...
Part 2 (Application) On January 1, 2017, a machine was purchased for $400,000 by Younger Leasing Co. The machine is expected to have a 10-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Juniper Inc. for 3 years on January 1, 2017, with annual rent payments of $69,560 due at the beginning of each year, starting January 1, 2017. The machine is expected to have a residual value at...
On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years....
On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years. The lease requires five annual payments of $10,000 beginning September 30, 2018. Vaughn’s incremental borrowing rate is 11%, and it uses a calendar year for reporting purposes. The machine has a 12-year economic life with zero salvage value. Vaughn correctly classifies the lease as an operating lease under ASU 2016-02. Use the appropriate factors (PV of 1, PVAD of 1, and PVOA of 1)....
On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years....
On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years. The lease requires five annual payments of $10,000 beginning September 30, 2018. Vaughn’s incremental borrowing rate is 11%, and it uses a calendar year for reporting purposes. The machine has a 12-year economic life with zero salvage value. Vaughn correctly classifies the lease as an operating lease under ASU 2016-02. Using (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate...
On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years....
On October 1, 2017, Vaughn, Inc., leased a machine from Fell Leasing Company for five years. The lease requires five annual payments of $10,000 beginning September 30, 2018. Vaughn’s incremental borrowing rate is 11%, and it uses a calendar year for reporting purposes. The machine has a 12-year economic life with zero salvage value. Vaughn correctly classifies the lease as an operating lease under ASU 2016-02. Using (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate...
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the...
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $131,591. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $18,200 at the beginning of each period Economic life of asset 2 years Fair value of asset...
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the...
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $139,107. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $18,000 at the beginning of each period Economic life of asset 2 years Fair value of asset...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT