At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,000,000 by signing a four-year lease, which is the expected useful life of the machine passing. The lease is payable in four annual payments of $1,892,825 at the end of each year. (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.) Required: 1. What is the effective rate of interest implicit in the agreement? 2-4. Prepare the lessee's journal entries at the inception of the lease, the first lease payment at December 31, 2024 and the second lease payment at December 31, 2025. 5. Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was 11%. Prepare the lessee's journal entries for 2024. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Req 5 Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was 11%. Prepare the lessee's journal entries for 2024. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.) View transaction list Journal entry worksheet < 1 2 3 Record the lease. Note: Enter debits before credits. Date January 01, 2024 General Journal Debit Credit 7 Show less▲
At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,000,000 by signing a four-year lease, which is the expected useful life of the machine passing. The lease is payable in four annual payments of $1,892,825 at the end of each year. (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.) Required: 1. What is the effective rate of interest implicit in the agreement? 2-4. Prepare the lessee's journal entries at the inception of the lease, the first lease payment at December 31, 2024 and the second lease payment at December 31, 2025. 5. Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was 11%. Prepare the lessee's journal entries for 2024. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Req 5 Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was 11%. Prepare the lessee's journal entries for 2024. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.) View transaction list Journal entry worksheet < 1 2 3 Record the lease. Note: Enter debits before credits. Date January 01, 2024 General Journal Debit Credit 7 Show less▲
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 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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Transcribed Image Text:At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,000,000 by signing a four-year lease, which is the
expected useful life of the machine passing. The lease is payable in four annual payments of $1,892,825 at the end of each year. (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.)
Required:
1. What is the effective rate of interest implicit in the agreement?
2-4. Prepare the lessee's journal entries at the inception of the lease, the first lease payment at December 31, 2024 and the second
lease payment at December 31, 2025.
5. Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's
incremental borrowing rate of interest for notes of similar risk was 11%. Prepare the lessee's journal entries for 2024.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 4
Req 5
Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's
incremental borrowing rate of interest for notes of similar risk was 11%. Prepare the lessee's journal entries for 2024. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not
in the millions of dollars. Round your answers to nearest whole dollars.)
View transaction list
Journal entry worksheet
1
2
3
Record the lease.
Note: Enter debits before credits.
Date
January 01, 2024
General Journal
Debit
Credit
>
Show less▲
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