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In: Accounting
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 The asset was acquired on 12/11/2012 Required; a) Check that the implicit rate is correct against FV. b) Do the journal entries for the Lessor (using the Net Method) for acquisition,
Solutions
ekkarill92 answered 4 months agoRelated Solutions
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...
Lessor enters into a seven-year lease for equipment with Lessee. Lessor sells and leases the equipment,...
Lessor enters into a seven-year lease for equipment with
Lessee. Lessor sells and leases the equipment, which is not
specialized in nature and is expected to have an alternative use
for Lessor at the end of the lease term. Under the lease:
Lessor receives annual lease payments of $25,000, with the
first one payable at the commencement of the lease and one payment
annually at the lease anniversary date thereafter.
Lessor expects the residual value of the equipment to be...
Lessee enters into a three-year lease of equipment and concludes that the agreement is a finance...
Lessee enters into a three-year lease of equipment and concludes
that the agreement is a finance lease because the lease term is for
a major part of the remaining economic life of the underlying asset
(also three years). In addition, Lessee pays initial direct costs
of $3,000. Also, assume that Lessee has guaranteed the residual
value of the equipment at the end of the lease term, has concluded
that it is probable that Lessee will owe $6,000 to Lessor as...
Lessee enters into a three-year lease of equipment and concludes that the agreement is a finance...
Lessee enters into a three-year lease of equipment and concludes
that the agreement is a finance lease because the lease term is for
a major part of the remaining economic life of the underlying asset
(also three years). In addition, Lessee pays initial direct costs
of $3,000. Also, assume that Lessee has guaranteed the residual
value of the equipment at the end of the lease term, has concluded
that it is probable that Lessee will owe $6,000 to Lessor as...
Lessee enters into a four-year lease of equipment and concludes that the agreement is a finance...
Lessee enters into a four-year lease of equipment and concludes
that the agreement is a finance lease because the lease contains an
option for Lessee to purchase the equipment at the end of the lease
and the Lessee is reasonably certain to exercise that option. The
arrangement provides the following:
Lease term
Four years, with the first payment due
at lease commencement and the remainder annually at the lease
anniversary date thereafter
Annual payments, beginning at lease
commencement and annually...
Lessee enters into a four-year lease of equipment and concludes that the agreement is a finance...
Lessee enters into a four-year lease of equipment and concludes
that the agreement is a finance lease because the lease contains an
option for Lessee to purchase the equipment at the end of the lease
and the Lessee is reasonably certain to exercise that option. The
arrangement provides the following:
Lease term
Four years, with the first payment due
at lease commencement and the remainder annually at the lease
anniversary date thereafter
Annual payments, beginning at lease
commencement and annually...
Jay Company, as lessee, enters into a lease agreement on January 1, 2020, to lease equipment....
Jay Company, as lessee, enters into a lease agreement on January
1, 2020, to lease equipment. The following data are relevant to the
lease agreement.
- The term of the noncancellable lease is three years, with no
renewal option. Payments of $12,000 are due on January 1, of each
year.
- The fair value of the equipment on January 1, 2020 is $35,000.
The equipment has an estimated economic life of five years, and an
unguarenteed residual value of $4,000....
Jay Company, as lessee, enters into a lease agreement on January 1, 2020, to lease equipment....
Jay Company, as lessee, enters into a lease agreement on January
1, 2020, to lease equipment. The following data are relevant to the
lease agreement.
- The term of the noncancellable lease is three years, with no
renewal option. Payments of $12,000 are due on January 1, of each
year.
- The fair value of the equipment on January 1, 2020 is $35,000.
The equipment has an estimated economic life of five years, and an
unguarenteed residual value of $4,000....
Falwell Company, as lessee, enters into a lease agreement on January 1, 2018, for equipment. The...
Falwell Company, as lessee, enters
into a lease agreement on January 1, 2018, for equipment. The
following data are relevant to the lease agreement:
1. The term of
the noncancelable lease is 4 years. Payments of $4,892 are due on
January 1 of each year.
2. The fair
value of the equipment on January 1, 2018 is $25,000 and the book
value is 20,000. The equipment has an economic life of 6 years.
Both parties expect the equipment to have an unguaranteed...
Cullumber Company, as lessee, enters into a lease agreement on July 1, 2021, for equipment. The...
Cullumber Company, as lessee, enters into a lease agreement on
July 1, 2021, for equipment. The following data are relevant to the
lease agreement:
1.
The term of the noncancelable lease is 4 years, with
no renewal option. Payments of $855,212 are due on
July 1 of each year.
2.
The fair value of the equipment on July 1, 2021 is $3,020,000.
The equipment has an economic life of 6 years with
no salvage value.
3.
Cullumber depreciates similar machinery...
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