Question
In: Accounting
ABC entered into a lease agreement with XYZ on 1 Jan 2015. The leased asset was...
ABC entered into a lease agreement with XYZ on 1 Jan 2015. The leased asset was purchased by XYZ for 180,000£ on 1 Jan 2015. It has a useful economic life of 5 years. The lease period is 4 years. ABC pays XYZ four annual instalments of 60,000£ each payable at the beginning of each financial year starting on 1 Jan 2015. The cost of capital for ABC is expected to be 8% per annum for the foreseeable future. The accounting year-end for ABC is 31 December. ABC uses the Sum of Digits method in allocating the finance charge over the lease period. Show how the lease agreement should be accounted for in the Income statement for the year ended and the statement of financial position of ABC as at 31 Dec 2015.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On 1 January 2015, Finley entered into an agreement to lease a boat. The term of...
On 1 January 2015, Finley entered into an agreement to
lease a boat. The term of the lease was four years. Annual
lease
payments of Rs. 10,000 are payable in advance. The interest rate
implicit in the
lease is 7.5%. Finley is responsible for insuring and maintaining
the boat throughout
the term of the lease. the expected salvage value of the boat is
2000.
Instructions:
(a)Tell whether this is operating or finance lease and give two
reasons. Also determine present...
Question: On 1 January 2015, Finley entered into an agreement to lease a boat. The fair...
Question:
On 1 January 2015, Finley entered into an agreement to lease a
boat. The fair value
of the boat was Rs. 36,000 and the term of the lease was four
years. Annual lease
payments of Rs. 10,000 are payable in advance. The interest rate
implicit in the
lease is 7.5%.
Intructions:
(a) determine whether this is operating or finance lease.
(b) prepare lease amortization schedule
(c) prepare journal entries on behalf of lessee for all years
including depreciation entries...
2016, ABC Company leased a copier from XYZ. The three-year lease agreement specifies annual payments of...
2016, ABC Company leased a copier from XYZ. The three-year lease
agreement specifies annual payments of $50,000 beginning January 1,
2016, the inception of the lease, and at each January 1 thereafter
through 2018. The useful life of the copier is estimated to be ten
years. Before deciding to lease, ABC considered purchasing the
copier for its cash price of $230,000. If funds were borrowed to
buy the copier, the interest rate would have been 8%. ABC Company
paid a...
On July 1, 2020, AMC entered into a lease agreement to lease specialty equipment for a...
On July 1, 2020, AMC entered into a lease agreement to lease
specialty equipment for a 6-year term. Annual lease payments are
$20,000, payable at the beginning of each lease year (July 1). At
the end of the lease the leased asset will revert to the lessor.
The asset’s economic life is estimated at 7 years. AMC could have
obtained equivalent financing from its bank at a rate of 14%.
AMC’s fiscal year end is December 31. AMC uses straight-line...
On 1 January 20x1, Success Co. entered into a lease agreement to lease a highly specialised...
On 1 January 20x1,
Success Co. entered into a lease agreement to lease a highly
specialised machinery (which had a useful life of 20 years) from
Victory Leasing Co.
Victory Leasing Co.
had bought the new machinery for a cash consideration of
$1,122,095.
The terms of the
lease agreement included the following:
Non-cancellable lease term of 15 years, with a renewal option
for another 5 years
Lease rental of $100,000 per year for the first 15 years and
$50,000 per...
On January 1, 2018 WAG entered into a non-cancellable lease agreement with PE for the lease...
On January 1, 2018 WAG entered into a non-cancellable lease
agreement with PE for the lease of specialized laboratory equipment
designed to draw blood to perform health tests for their customers.
The lease agreement requires WAG to make beginning of the year
payments for the 5-year term of the lease. The fair value of the
equipment at lease inception is $25,418,156. WAG guarantees to PE
that the residual value of the equipment at the end of the term of
the...
On January 1, 2020, Winthrop Inc. entered into a lease agreement to lease equipment: 5-year lease...
On January 1, 2020, Winthrop Inc. entered into a lease agreement
to lease equipment:
5-year lease term
Annual lease payments are $10,000
First payment is on January 1, 2020 and the other payments are
on 31 December each year
At the end of the lease the leased asset will revert to the
lessor
The asset’s economic life is estimated at 10 years
Winthrop could have obtained equivalent financing from its bank
at a rate of 5%
Winthrop’s fiscal year end...
On January 1, 2020, Winthrop Inc. entered into a lease agreement to lease equipment: 5-year lease...
On January 1, 2020, Winthrop Inc. entered into a lease agreement
to lease equipment:
5-year lease term
Annual lease payments are $10,000
First payment is on January 1, 2020 and the other payments are
on 31 December each year
At the end of the lease the leased asset will revert to the
lessor
The asset’s economic life is estimated at 10 years
Winthrop could have obtained equivalent financing from its bank
at a rate of 5%
Winthrop’s fiscal year end...
On January 1, 2020, Winthrop Inc. entered into a lease agreement to lease equipment: 5-year lease...
On January 1, 2020, Winthrop Inc. entered into a lease agreement
to lease equipment:
5-year lease term
Annual lease payments are $10,000
First payment is on January 1, 2020 and the other payments are
on 31 December each year
At the end of the lease the leased asset will revert to the
lessor
The asset’s economic life is estimated at 10 years
Winthrop could have obtained equivalent financing from its bank
at a rate of 5%
Winthrop’s fiscal year end...
On January 1, 2020, Winthrop Inc. entered into a lease agreement to lease equipment: 5-year lease...
On January 1, 2020, Winthrop Inc. entered into a lease agreement
to lease equipment:
5-year lease term
Annual lease payments are $10,000
First payment is on January 1, 2020 and the other payments are
on 31 December each year
At the end of the lease the leased asset will revert to the
lessor
The asset’s economic life is estimated at 10 years
Winthrop could have obtained equivalent financing from its bank
at a rate of 5%
Winthrop’s fiscal year end...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella Co.,...
- Parallel Arrays This question is in MindTap Cengage Summary In this lab, you use what you...
- 5. You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella...
- JAVA Write a test program that prompts the user to enter a series of integers and...
- (2) Cite an example on how organizations like Google, Facebook, Youtube etc collect data for image...
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
ADVERTISEMENT