Question

In: Accounting

Right- to- Debbink Co. leased machinery from Young, Inc. on January 1, 2017. The lease term...

Right- to- Debbink Co. leased machinery from Young, Inc. on January 1, 2017. The lease term was for 8 years, with equal annual rental payments of $5,300 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $2,000, which Debbink is reasonably certain it will exercise as it believes the fair value of the machinery will be at least $6,000. The machinery has a useful life of 10 years and a fair value of $36,000. The implicit rate of the lease is not known to Debbink. Debbink’s incremental borrowing rate is 8%.


Prepare Debbink’s 2017 journal entries. Need to use factor table. Below are the entries, need numbers.

Right- to- asset

Lease LIability

Lease Liability

Cash

Interest Expense

Lease Liability

Amortization Expense

Right -to- asset

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

On January 1, 2020, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of...
On January 1, 2020, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of the lease require annual payments of $25,000 for 20 years beginning on December 31, 2020. The interest rate on the lease is 10%. Assume the lease qualifies as a capital lease and Digital, Inc. employs the double-declining balance method to depreciate its assets. Use the time value of money factors posted in carmen to answer this question. No credit will be awarded for this...
On January 1, 2020, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of...
On January 1, 2020, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of the lease require annual payments of $25,000 for 20 years beginning on December 31, 2020. The interest rate on the lease is 10%. Assume the lease qualifies as a capital lease and Digital, Inc. employs the double-declining balance method to depreciate its assets. Calculate the book value of the leased asset at December 31, 2022. Use the time value of money factors posted in...
Amusement Company leased equipment from General Robotics Company, beginning on January 1, 2017. The lease term...
Amusement Company leased equipment from General Robotics Company, beginning on January 1, 2017. The lease term is 5 years and requires equal rental payments of $60,493 at the beginning of each year of the lease (based on a 6% interest rate) starting on the commencement date (January 1, 2017). The equipment has a fair value at the commencement date of the lease of $300,000, a carrying value to General Robotics of $275,000, an estimated useful life of 5 years, and...
Amusement Company leased equipment from General Robotics Company, beginning on January 1, 2017. The lease term...
Amusement Company leased equipment from General Robotics Company, beginning on January 1, 2017. The lease term is 5 years and requires equal rental payments of $60,493 at the beginning of each year of the lease (based on a 6% interest rate) starting on the commencement date (January 1, 2017). The equipment has a fair value at the commencement date of the lease of $300,000, a carrying value to General Robotics of $275,000, an estimated useful life of 5 years, and...
On January 1, 2021, The Danny Ainge Co. leased printing equipment from Laker LeaseCorp. Lease term...
On January 1, 2021, The Danny Ainge Co. leased printing equipment from Laker LeaseCorp. Lease term = 3 years Useful life = 4 years Semiannual lease payments of $164,000 at the beginning of each period Interest rate = 14% Unguaranteed residual value = $50,000 Maintenance Fees = $4,000/twice each year (included in the payments) Lessor’s initial indirect costs = $5,000 Cost to produce the printing machine = $550,000 After the fact, you determine that your actual Residual Value is $20,000...
On January 1, 2021, Kiki Co. leased machinery from Jiji Co. Presented below is selected information...
On January 1, 2021, Kiki Co. leased machinery from Jiji Co. Presented below is selected information about the non-cancelable lease agreement, the leased equipment, and the parties to the lease. • Kiki borrows at 5% and is unable to determine that Jiji’s implicit rate is 4%. • Jiji paid $90,000 for the machine and at the inception of the lease, its fair value is $120,000. • The machine has a $7,000 residual value, none of which is guaranteed, and an...
Maco Inc. leased equipment to Pelican Co on January 1, 2020. The lease agreement calls for...
Maco Inc. leased equipment to Pelican Co on January 1, 2020. The lease agreement calls for annual rental payments of $3,050 at the beginning of each year of the 3 year lease. The equipment has an economic useful life of 7 years, a fair value of $12,000, a book value of $5,000 and Maco expects a residual value of $4,000 at the end of the lease term (and 0 at the end of the assets life). Maco sets the lease...
On January 1, 2017, Babson, Inc., leased two automobiles for executive use. The lease requires Babson...
On January 1, 2017, Babson, Inc., leased two automobiles for executive use. The lease requires Babson to make five annual payments of $13,000, beginning January 1, 2017. At the end of the lease term on December 31, 2021, Babson guarantees that the residual value of the automobiles will total $10,000. The lease qualifies as a capital lease. The interest rate implicit in the lease is 9%. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the...
On January 2, 20X1, Elsee Co. leased equipment from Grant, Inc. Lease payments are $100,000, payable...
On January 2, 20X1, Elsee Co. leased equipment from Grant, Inc. Lease payments are $100,000, payable annually every December 31 for twenty years. Title to the equipment passes to Elsee at the end of the lease term. The lease is noncancellable. The equipment has a $750,000 carrying amount on Grant’s books. Its estimated economic life was twenty-five years on January 2, 20X1. The rate implicit in the lease, which is known to Elsee, is 10%. Elsee’s incremental borrowing rate is...
On January 1, 2017, Marin Co. leased a building to Cullumber Inc. The relevant information related...
On January 1, 2017, Marin Co. leased a building to Cullumber Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $2,700,000 (unguaranteed). 2. The leased building has a cost of $3,200,000 and was purchased for cash on January 1, 2017. 3. The building is depreciated on a straight-line basis. Its estimated economic life is...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT