On January 1, Keunho Industries leased equipment to a customer for a four-year period, at which time possession of the lea will revert back to Keunho. The equipment cost Keunho $355,000 and has an expected useful life of six years. Its normal s $355,000. The residual value after four years is $100,000. Lease payments are due on December 31 of each year, beginn: first payment at the end of the first year. The interest rate is 8%, What is the amount of the annual lease payments? Note: Round your answer to the nearest whole dollar amount. The present value of $1: n=4,/-8% is 0.73503. The present value of an ordinary annuity of $1: n=4, / -8% is 3.31213. me present value of an annuity due of $1: n=4, / 8% is 3.57710.

On January 1, Keunho Industries leased equipment to a customer for a four-year period, at which time possession of the lea will revert back to Keunho. The equipment cost Keunho $355,000 and has an expected useful life of six years. Its normal s $355,000. The residual value after four years is $100,000. Lease payments are due on December 31 of each year, beginn: first payment at the end of the first year. The interest rate is 8%, What is the amount of the annual lease payments? Note: Round your answer to the nearest whole dollar amount. The present value of $1: n=4,/-8% is 0.73503. The present value of an ordinary annuity of $1: n=4, / -8% is 3.31213. me present value of an annuity due of $1: n=4, / 8% is 3.57710.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

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On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
On January 1, James Industries leased equipment to a customer for a four-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $700,000 and has an expected useful life of six years. Its normal sales price is $700,000. The residual value after four years, guaranteed by the lessee, is $100,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. Collectibility of the remaining lease payments is reasonably assured, and there are no material cost uncertainties. The interest rate is 5%. Calculate the amount of the annual lease payments.
On January 1, James Industries leased equipment to a customer for a six-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $760,000 and has an expected useful life of eight years. Its normal sales price is $760,000. The residual value after six years is $100,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 8%. Calculate the amount of the annual lease payments. Chart to Use: Table or calculator function: Amount to be recovered (fair value) Present value of the residual value Table or calculator function: S Amount to recovered through periodic lease payments Lease Payment Amount of each annual lease payment. Residual Value n= i= n= i= Present value Lease Payments
On January 1, Keunho Industries leased equipment to a customer for a four-year perlod, at which time possession of the leased asset will revert back to Keuntia The equipment cost Keunho $270,000 and has an expected useful life of six years. Its normal sales price is $270,000. The residual value after four years is $100,000 Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 9% What is the amount of the annual lease payments? Note: Round your answer to the nearest whole dollar amount. The present value of $t: n=4,/9% is 0.70843 The present value of an ordinary annuity of $1: n=4, / -9% is 3.23972. The present value of an annuity due of $1: n=4./=9% is 3.53129. Multiple Choice O $54,166 $56,398 4
On January 1, James Industries leased equipment to a customer for a six-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $820,000 and has an expected useful life of eight years. Its normal sales price is $820,000. The residual value after six years is $200,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The Interest rate is 6%. (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.) Calculate the amount of the annual lease payments. (Enter amounts as positive values rounded to the nearest whole dollar.) Guaranteed Residual Value Table or calculator function: Amount to be recovered (fair value) Guaranteed residual value Amount to be recovered through periodic lease payments Lease Payment Table or calculator function: Amount of each annual lease payment. n= j= n= Present value Lease…
On January 1, James Industries leased equipment to a customer for a four-year period, at which time possessionof the leased asset will revert back to James. The equipment cost James $700,000 and has an expected useful lifeof six years. Its normal sales price is $700,000. The residual value after four years is $100,000. Lease paymentsare due on December 31 of each year, beginning with the first payment at the end of the first year. The interestrate is 5%. Calculate the amount of the annual lease payments.
On January 1, James Industries leased equipment to a customer for a five-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $860,000 and has an expected useful life of seven years. Its normal sales price is $860,000. The residual value after five years is $200,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 6%. (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.)Calculate the amount of the annual lease payments.
On January 1, James Industries leased equipment to a customer for a five-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $860,000 and has an expected useful life of seven years. Its normal sales price is $860,000. The residual value after five years is $200,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 6%. (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.)Calculate the amount of the annual lease payments. (Round your answers to the nearest whole number.)
Gordon Inc., a private company that follows ASPE, entered into a lease agreement with Canada Leasing Corporation to lease a warehouse for six years. Annual lease payments are $21,000, payable at the beginning of each lease year. Gordon Inc. signed the lease agreement on January 1, 2021, and made the first payment on that date. At the end of the lease, the machine will revert back to Canada Leasing Corporation. The normal useful life of the warehouse is 10 years. At the time of the lease, the warehouse could be purchased for $108,000. Gordon does not know the implicit rate of the lease; Gordon's incremental borrowing rate is 10%. Gordon uses straight-line depreciation for this type of asset. Required: Using the three criteria under ASPE, prove whether this is an operating or capital lease. Prepare a lease amortization schedule for the lease. Round all amounts to the nearest dollar. Prepare the journal entries for 2021 and 2022 for Gordon Inc. Round amounts to the nearest…
Telor, a private company that follows ASPE, entered into a lease agreement with Global Leasing Corporation to lease a warehouse for six years. Annual lease payments are $21,000, payable at the beginning of each lease year. Telor signed the lease agreement on January 1, 2021, and made the first payment on that date. At the end of the lease, the machine will revert back to Global Leasing Corporation. The normal useful life of the warehouse is 10 years. At the time of the lease, the warehouse could be purchased for $108,000. Telor does not know the implicit rate of the lease; Telor's incremental borrowing rate is 10%. Telor uses straight-line depreciation for this type of asset. Required: Using the three criteria under ASPE, prove whether this is an operating or capital lease. Prepare a lease amortization schedule for the lease. Round all amounts to the nearest dollar. Prepare the journal entries for 2021 and 2022 for Telor. Round amounts to the nearest dollar.
On January 1, Garcia Supply leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. Negotiations led to Garcia guaranteeing a $36,000 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $35,000. What is the amount to be added to the right-of-use asset and lease liability under the residual value guarantee? Note: Use tables, Excel, or a financial calculator. Enter your answer in whole dollars. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)