Pen Wines P/L has leased (lessee) a wine-press on the following terms; Date of entering lease;...

Pen Wines P/L has leased (lessee) a wine-press on the following terms; Date of entering lease; 1 Jan/15 Duration of lease 5 years Life of asset 6 years Unguaranteed residual value $40,000 Lease payments inception (at the start) $60,000 Annual payments (5) $65,000 Implied rate 11.0 % Required:Required:Required: Required:Required:Required: a) Discuss the logic behind requiring some lease payments (e.g. finance leases) to be capitalized while other lease payments (operating leases) must be expensed. b) Determine the Fair Value (rounded off) of the leased asset. c) Journalize the entries for 1/1/2015 to 1/1/2016 (NB: 31 Dec is the year-end

Expert Solution

ekkarill92 answered 1 year ago

Fitbit Ltd has leased a machine on the following terms:Date of entering lease 1 July...

Fitbit Ltd has leased a machine on the following terms:Date of entering lease 1 July 2019 Duration of lease 5 yearsLife of asset 6 yearsUnguaranteed residual value $40,000Lease payments inception (at the start) $60,000Annual payments (5) $65,000Implied rate 11.0 %Required: Determine the Fair Value (rounded off) of the leased asset.

Delta Dredge P/L enters into a lease (to a lessee) agreement and leases dredging equipment to...

Delta Dredge P/L enters into a lease (to a lessee) agreement and leases dredging equipment to Wollongong council keep a river mouth clear for boating. The lease consists of the following; date of inception: 1/7/10 duration of lease: 4yrs life of asset: 5 yrs residual value: $120000 lease payments: 165000 annual includes $18000 for maintenance and insurance costs per annum. $90000 (added to final payment) interest: 12.5% fair value: $498016 required: check the rate is correct against FV do journal...

Agri Machinery P/L enters into a lease (to a lessee) agreement and leases harvesting equipment to...

Agri Machinery P/L enters into a lease (to a lessee) agreement and leases harvesting equipment to Grain Holdings Ltd. The lease consists of the following;  Date of inception: 1/1/13  Duration of lease: 4 years  Life of leased asset: 5 years  Lease payments (annual): $160,000 (annual) includes $15,000 for maintenance and insurance costs per annum.  $70,000 (added to final payment)  Implicit rate of interest is 11.5% (is this the actual rate)  Fair value: $490,384...

Question 24 Whiterun Ltd leases a boat to Riverwood Ltd. The lease has the following terms:...

Question 24 Whiterun Ltd leases a boat to Riverwood Ltd. The lease has the following terms: The lease is for a three year period, commencing 1 July 2020. The lease payments are to be made in advance, with the first payment on 1 July 2020. Each lease payment is to be for $20 000. The expected residual value of the boat is $5 000. Riverwood Ltd guarantees $4 000 of the residual value. The interest rate implicit in the lease...

A ﬁrm has the following long run production function x = a(K^1/2)(L^1/2)(P^1/4), where a > 0...

A ﬁrm has the following long run production function x = a(K^1/2)(L^1/2)(P^1/4), where a > 0 is a constant and K, L , P are inputs of the three factors. The prices of K, L , P are Rs. 1 , Rs. 9 and Rs. 8 respectively. a) Derive the ﬁrm’s long run total cost function , long run average cost function and long run marginal cost function. Show the workings in detail b) In the short run P is...

Question