Question
In: Accounting
On January 1, 2018, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year...
On January 1, 2018, Allied Industries leased a high-performance
conveyer to Karrier Company for a four-year period ending December
31, 2021, at which time possession of the leased asset will revert
back to Allied. The equipment cost Allied $956,000 and has an
expected useful life of five years. Allied expects the residual
value at December 31, 2022, will be $300,000. Negotiations led to
the lessee guaranteeing a $340,000 residual value. (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.)
Equal payments under the finance/sales-type lease are $200,000 and
are due on December 31 of each year with the first payment being
made on December 31, 2018. Karrier is aware that Allied used a 5%
interest rate when calculating lease payments.
Required:
1. Prepare the appropriate entries for both
Karrier and Allied on January 1, 2018, to record the lease.
2. Prepare all appropriate entries for both
Karrier and Allied on December 31, 2018, related to the lease.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2018, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year...
On January 1, 2018, Allied Industries leased a high-performance
conveyer to Karrier Company for a four-year period ending December
31, 2021, at which time possession of the leased asset will revert
back to Allied. The equipment cost Allied $923,000 and has an
expected useful life of five years. Allied expects the residual
value at December 31, 2021, will be $307,000. Negotiations led to
the lessee guaranteeing a $354,000 residual value.
Equal payments under the finance/sales-type lease are $207,000 and
are...
On January 1, 2018, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year...
On January 1, 2018, Allied Industries leased a high-performance
conveyer to Karrier Company for a four-year period ending December
31, 2021, at which time possession of the leased asset will revert
back to Allied. The equipment cost Allied $969,000 and has an
expected useful life of five years. Allied expects the residual
value at December 31, 2021, will be $313,000. Negotiations led to
the lessee guaranteeing a $366,000 residual value.
Equal payments under the finance/sales-type lease are $213,000 and
are...
On January 1, 2018, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year...
On January 1, 2018, Allied Industries leased a high-performance
conveyer to Karrier Company for a four-year period ending December
31, 2021, at which time possession of the leased asset will revert
back to Allied. The equipment cost Allied $956,000 and has an
expected useful life of five years. Allied expects the residual
value at December 31, 2022, will be $300,000. Negotiations led to
the lessee guaranteeing a $340,000 residual value.
Equal payments under the finance/sales-type lease are $200,000
and are...
On January 1, 2018, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year...
On January 1, 2018, Allied Industries leased a high-performance
conveyer to Karrier Company for a four-year period ending December
31, 2021, at which time possession of the leased asset will revert
back to Allied. The equipment cost Allied $963,000 and has an
expected useful life of five years. Allied expects the residual
value at December 31, 2022, will be $307,000. Negotiations led to
the lessee guaranteeing a $354,000 residual value.
Equal payments under the finance/sales-type lease are $207,000
and are...
On January 1, 2018, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year...
On January 1, 2018, Allied Industries leased a high-performance
conveyer to Karrier Company for a four-year period ending December
31, 2021, at which time possession of the leased asset will revert
back to Allied. The equipment cost Allied $929,000 and has an
expected useful life of five years. Allied expects the residual
value at December 31, 2022, will be $313,000. Negotiations led to
the lessee guaranteeing a $366,000 residual value.
Equal payments under the finance/sales-type lease are $213,000
and are...
10. On January 1, 2021, Central Industries leased a high-performance conveyer to Dynamic Company for a...
10.
On January 1, 2021, Central Industries leased a high-performance
conveyer to Dynamic Company for a four-year period ending December
31, 2021, at which time possession of the leased asset will revert
back to Central. The equipment cost Central $2,912,000 and has an
expected useful life of five years. Central expects the residual
value at December 31, 2025, will be $700,000. Negotiations led to
the lessee guaranteeing a $680,000 residual value.
Equal payments under the finance/sales-type lease are $500,000 and...
ABC Company leased a tooling machine on January 1, 2018, for a four-year period ending December...
ABC Company leased a tooling machine on January 1, 2018, for a
four-year period ending December 31, 2021. The lease agreement
specified annual payments of $25,000 beginning with the first
payment at the beginning of the lease, and each December 31 through
2020. The company had the option to purchase the machine on
December 30, 2021, for $16,000 when its fair value was expected to
be $24,000 a sufficient difference that exercise seems reasonably
certain. The machine's estimated useful life...
Entity A leased a machine on January 1, 2018, from LeaseCo for a four-year period. The...
Entity A leased a machine on January 1, 2018, from LeaseCo for a
four-year period. The lease agreement calls for annual payments in
the amount of $360,000 on January 1, 2018 and on December 31 of
each year beginning on December 31, 2018. The machine's estimated
useful life is expected to be four years with no residual value.
The appropriate interest rate for this lease is 12%.
1. Calculate the amount to be recorded as a right-of-use asset
and the...
Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2018. Natick has the option...
Natick Industries leased high-tech instruments from Framingham
Leasing on January 1, 2018. Natick has the option to renew the
lease at the end of two years for an additional three years. Natick
is subject to a $55,000 penalty after two years if it fails to
renew the lease. Framingham Leasing purchased the equipment from
Waltham Machines at a cost of $346,294. (FV of $1, PV of $1, FVA of
$1, PVA of $1, FVAD of $1 and PVAD of $1)...
Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2018. Natick has the option...
Natick Industries leased high-tech instruments from Framingham
Leasing on January 1, 2018. Natick has the option to renew the
lease at the end of two years for an additional three years. Natick
is subject to a $45,000 penalty after two years if it fails to
renew the lease. Framingham Leasing purchased the equipment from
Waltham Machines at a cost of $321,800. (FV of $1, PV of $1, FVA of
$1, PVA of $1, FVAD of $1 and PVAD of $1)...
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