Question
In: Accounting
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending...
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2018, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $843,368 and has an expected economic life of five years. Nevels expects the residual value at December 31, 2018, will be $119,000. Negotiations led to the lessee guaranteeing a $178,000 residual value. Equal payments under the lease are $219,000 and are due on December 31 of each year with the first payment being made on December 31, 2018. Nguyen is aware that Nevels used a 6% interest rate when calculating lease payments. (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.)
1. Prepare the appropriate entries for both Nguyen and Nevels on January 1, 2018, to record the lease.
2. Prepare all appropriate entries for both Nguyen and Nevels on December 31, 2018, related to the lease.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending...
On January 1, 2018, Nguyen Electronics leased equipment from
Nevels Leasing for a four-year period ending December 31, 2021, at
which time possession of the leased asset will revert back to
Nevels. The equipment cost Nevels $824,368 and has an expected
economic life of five years. Nevels expects the residual value at
December 31, 2018, will be $100,000. Negotiations led to the lessee
guaranteeing a $140,000 residual value.
Equal payments under the lease are $200,000 and are due on December...
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending...
On January 1, 2018, Nguyen Electronics leased equipment from
Nevels Leasing for a four-year period ending December 31, 2018, at
which time possession of the leased asset will revert back to
Nevels. The equipment cost Nevels $843,368 and has an expected
economic life of five years. Nevels expects the residual value at
December 31, 2018, will be $119,000. Negotiations led to the lessee
guaranteeing a $178,000 residual value.
Equal payments under the lease are $219,000 and are due on December...
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending...
On January 1, 2018, Nguyen Electronics leased equipment from
Nevels Leasing for a four-year period ending December 31, 2018, at
which time possession of the leased asset will revert back to
Nevels. The equipment cost Nevels $843,368 and has an expected
economic life of five years. Nevels expects the residual value at
December 31, 2018, will be $119,000. Negotiations led to the lessee
guaranteeing a $178,000 residual value.
Equal payments under the lease are $219,000 and are due on December...
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending...
On January 1, 2018, Nguyen Electronics leased equipment from
Nevels Leasing for a four-year period ending December 31, 2018, at
which time possession of the leased asset will revert back to
Nevels. The equipment cost Nevels $843,368 and has an expected
economic life of five years. Nevels expects the residual value at
December 31, 2018, will be $119,000. Negotiations led to the lessee
guaranteeing a $178,000 residual value.
Equal payments under the lease are $219,000 and are due on December...
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending...
On January 1, 2018, Nguyen Electronics leased equipment from
Nevels Leasing for a four-year period ending December 31, 2021, at
which time possession of the leased asset will revert back to
Nevels. The equipment cost Nevels $827,368 and has an expected
economic life of five years. Nevels expects the residual value at
December 31, 2021, will be $103,000. Negotiations led to the lessee
guaranteeing a $146,000 residual value.
Equal payments under the lease are $203,000 and are due on December...
On January 1, 2018, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending...
On January 1, 2018, Nguyen Electronics leased equipment from
Nevels Leasing for a four-year period ending December 31, 2018, at
which time possession of the leased asset will revert back to
Nevels. The equipment cost Nevels $824,368 and has an expected
economic life of five years. Nevels expects the residual value at
December 31, 2018, will be $100,000. Negotiations led to the lessee
guaranteeing a $140,000 residual value. Equal payments under the
lease are $200,000 and are due on December...
On January 1, 2018, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period...
On January 1, 2018, Maywood Hydraulics leased drilling equipment
from Aqua Leasing for a four-year period ending December 31, 2021,
at which time possession of the leased asset will revert back to
Aqua. The equipment cost Aqua $434,644 and has an expected economic
life of five years. Aqua expects the residual value at December 31,
2018, to be $70,000. Negotiations led to Maywood guaranteeing a
$100,000 residual value.
Equal payments under the lease are $140,000 and are due on December...
On January 1, 2021, Osiris Inc. leased manufacturing equipment from Giza Leasing for a four-year period...
On January 1, 2021, Osiris Inc. leased manufacturing equipment
from Giza Leasing for a four-year period ending December 31, 2021,
at which time possession of the leased asset will revert back to
Giza. The equipment cost Giza $206,092 and has an expected economic
life of five years. Giza expects the residual value at December 31,
2021, to be $25,000. Negotiations led to Osiris guaranteeing a
$35,000 residual value.
Equal payments under the lease are $50,000 and are due on December...
On January 1, 2021, Osiris Inc. leased manufacturing equipment from Giza Leasing for a four-year period...
On January 1, 2021, Osiris Inc. leased manufacturing equipment
from Giza Leasing for a four-year period ending December 31, 2021,
at which time possession of the leased asset will revert back to
Giza. The equipment cost Giza $206,092 and has an expected economic
life of five years. Giza expects the residual value at December 31,
2021, to be $25,000. Negotiations led to Osiris guaranteeing a
$35,000 residual value.
Equal payments under the lease are $50,000 and are due on
December...
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...
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