Chapter 20

Example 1 and 2 answers please

Part 1: New Lease Accounting – using IFRS 16 Leases Effect Analysis.  Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement. - Variable lease payments linked to future use or sales - Optional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option.

TOPIC: LEASESa. Give the entries in the books of Chris Tucker for years 2020 and 2021 as a result of the lease contract.b. Give the entries in the books of Jackie Chan Leasing for years 2020 and 2021.

PROBLEM NO. 3 Assume that DBP Leasing Corp. and Minasugbo Inc. sign a lease contract effective on January 1, 2019 where DBP Leasing leases to Minasugbo a bulldozer. The terms and provisions of the lease contract and other pertinent date are as follows: • The term of the lease is five years. The lease agreement is non-cancelable, requiring equal rental payments of P20,711.11 at the beginning of each year (annuity-due basis). The bulldozer has a fair value at the commencement of the lease of P100,000, an estimated economic life of five years, and a guaranteed residual value of P5,000. (Minasugbo expects that it is probable that the expected value of the residual value at the end of the lease will be greater than the guaranteed amount of P5,000.) The lease contains no renewal options. The bulldozer reverts to DBP Leasing at the termination of the lease. Minasugbo's incremental borrowing rate is 5 percent per year. • Minasugbo depreciates its equipment on a straight-line basis. DBP Leasing…

Question 4 On January 1, 2019, the Okanagan Flight Institute, which reports its financial results in accordance with ASPE, entered into a contract to lease a flight simulator, details of which follow: Lease term Economic life of equipment Lease payment Fair value of asset Implicit rate in the lease (not known by lessee) Incremental borrowing rate Option to purchase Guaranteed residual value Year end is December 31 Expected payout under guarantee 5 years 7 years $7,800, first due January 1, 2019 $40,000 6% 7% No $5,000 $0 Required: a) Evaluate this term from the perspective of Okanagan Flight Institute using the four primaryASPE criteria. Should it classify the lease as a finance lease or an operating lease? b) Using Excel, prepare an asset depreciation schedule that covers the useful life of the equipment using straight-line depreciation. c) Prepare a lease liability amortization schedule for the life of the lease using Excel. d) Prepare all journal entries for Okanagan Flight…

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Part 1: New Lease Accounting – IFRS 16 Leases Effect Analysis. Q: Discuss the effects of the new accounting on the following items and ratios of lessees. Provide reason(s) behind all effects, in the following: 1. EBITDA, operating profit, and profit before tax 2. Operating cash flow, financing cash flow, and total cash flow 3. Debt to equity, current ratio, and return on total assets

What is the net lease receivable of the lessor at the commencement of the lease? *a. 4,534,000b. 3,790,000c. 4,990,000d. 2,590,000

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Solving this problem

Part 1: New Lease Accounting –IFRS 16 Leases Effect Analysis.   Identify differences between IFRS 16 and U.S. GAAP new lease accounting (ASC Topic 842). Based on these differences, discuss which one (IFRS or U.S. GAAP) you favor and why?   Discuss three main features of the two transition methods for lessees under ASC 842 and IFRS 16. Which transition method would investors likely prefer?  Why?  Which transition method may be preferred by companies?  Why?

*attached is the problem REQUIRED: choose the letter What is the lease liability on Dec. 31, 2020?  a. 1,352,000b. 1,152,000c. 1,067,200d. 1,552,000 What is the lease liability to be reported as non-current on Dec 31, 2020? a. 1,215,920b. 1,090,240c. 1,067,200d. 973,920

TOPIC: LEASESCompute for the following (show solution):a. How much total profit should Technocraft recognize for the year ended December 31, 2020?b. How much interest expense shall Marina Sands recognize for the year ended December 31, 2020?c. What amount shall Marina Sands report for the equipment at December 31, 2021?d. What amount of interest revenue should Technocraft report for the year ended December 31, 2020?e. What amount of financial asset shall Technocraft report at December 31, 2020?

PROBLEM 3C Assume that ADB Leasing Corp. and WXY Inc. sign a lease contract effective on January 1, 2019where ADB Leasing leases to WXY Inc. a bulldozer. The terms and provisions of the lease contract andother pertinent date are as follows:• The term of the lease is five years. The lease agreement is non-cancelable, requiring equal rentalpayments of P20,711.11 at the beginning of each year (annuity-due basis).• The bulldozer has a fair value at the commencement of the lease of P100,000, an estimatedeconomic life of five years, and a guaranteed residual value of P5,000. (WXY expects thatit is probable that the expected value of the residual value at the end of the lease will be greaterthan the guaranteed amount of P5,000.)• The lease contains no renewal options. The bulldozer reverts to ADB Leasing at the terminationof the lease.• WXY's incremental borrowing rate is 5 percent per year.• WXY depreciates its equipment on a straight-line basis.• ADB Leasing sets the annual rental rate to…

The following information is provided for an equipment leased by Lessee from Lessor. Lessee and Lessor both use IFRS. Inception Date of Lease Annual Lease Payment (Due: Beginning of Year, Starting Jan 1, 2020) Purchase option at of Lease Term (Certain to be exercised by Lessee) Lease Term Economic Life of Leased Equipment Lessor's Cost Fair Value of Asset Lessor's implicit rate Lessee's incremental borrowing rate Salvage value at the end of economic life) Select one: True O False Unearned Interest Income 30,858 ÷ January 01,2020 Sales 22,642 = 21,500 The lessor will most likely classify this as Sales Type Lease. Cost of Goods Sold 3,000 7 years 10 years Lessor will record the following at the beginning of the Lease term: Lease Receivable 122,642 ÷ 98,114 Same as present value of all future payments. 8%, known to Lessee Known to Lessee 7% 0 Time

How do they find the irr?

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t34   Initial direct costs incurred by the lessor in an operating lease should beA. expensed in the year of incurrence by including them in the cost of goods sold or by treating them as a sellingexpense.B. deferred and recognized as reduction in the interest rate implicit in the lease.C. capitalized as part of asset cost and depreciated over the lease term.D. deferred and carried on the statement of financial position until the end of the lease term.

Reporting Finance Lease, Guaranteed Residual-Lessee Mac Leasing Company (lessor) and Ash Corporation (lessee) signed a four-year lease on January 1 of Year 1. The underlying asset has an estimated life of six years and a fair value of $50,000, and the property reverts to Mac at the end of the lease term. Lease payments of $11,923 are payable on January 1 of each year beginning at the lease commencement and are set to yield Mac a return of 8%, which is known to Ash. The estimated residual value at the end of the lease term is $10,000 and is guaranteed by Ash Corporation. Ash expects the residual value at the end of the lease term to be $10,000. The lease contains no purchase option. Requireda. How would Ash Corporation classify the lease? Finance Lease b. What is the lease liability balance on January 1, the lease commencement date? Note: Round your answer to the nearest whole dollar. $ Estimated Residual = Guaranteed Residual, Estimated Residual < Guaranteed Residual Note: Round your…

Question 1: HKU Leasing agrees to lease equipment to Minion Furniture on January 1, 20X1. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 7 years. 2. The cost of the machinery is $700,000. The fair value of the asset on January 1, 20X1 is $700,000. 3. The lease contains a bargain purchase option of $60,000 exercisable at the end of lease term. At the end of the lease term, the asset reverts to the lessor and expected residual value is zero. Minion uses straight-line depreciation for all long-term assets. 4. HKU’s implicit rate is 6%, and Minion’s incremental borrowing rate is 6% 5. The lease is a non-cancellable lease. First payment is made in advance and the remaining payment are made on Dec 31 each year. Required: 1. Calculate the amount of the annual rental payment required. 2. Prepare journal entries to record the lease for HKU (lessor) for the year 20X1. 3.…

Hi, Please help to determine present value of lease payments (lessee) considering the following:   Project 2.2 Topic: Leases Part 2 Illini leases another piece of equipment from Cubs Corporation under a four-year lease agreement on 1/1/20x1. The lease specifies annual payments on each 1/1 and the first payment of $10,000 is made on 1/1/20x1. The lease also specifies a 3% annual increase in the lease payments. The equipment has a fair value of $100,000 on 1/1/20x1. The expected useful life of the equipment is 10 years with no residual value. The equipment will be returned to Cubs at the end of the lease term. The implicit rate is 10%. Project 2.2 Part 2 Ledger Date Account Name   Debit Credit 1/1/20x1 ROU assets   [A]       Lease obligation [B]

Question 5 The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Inception date: May 1, 2025 Annual lease payment due at the beginning of each year, beginning with May 1, 2025: $30,000 Bargain-purchase option price at end of lease term = $10,000 Lessor's implicit rate = 7% The lease term ends in FIVE years on April 30, 2030. What is the present value of the asset being leased? Recommendation: draw a timeline of the cash flows from the lessee to the lessor. Your Answer: Answer

b) The information below relates to a leasing arrangement between Simmonds Leasing Company and Telsan Company, a lessee. Inception date January 1, 2020 Lease term 6 years Annual lease payment due at the beginning ofeach year, beginning with January 1, 2020 $150,000 Fair value of asset at January 1, 2020 $760,000 Economic life of leased equipment 7 years Residual value of equipment at end of lease term,guaranteed by the lessee $65,500 Lessor’s implicit rate 10% Lessee’s incremental borrowing rate 12% January 1, 2020 The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $65,500. The lessee uses the straight-line depreciation method for all equipment. Instructions (i)  What is the lease liability for Telsan Company?   (ii)  Record the lease on Telsan Company’s books at the date of inception. (iii)Record the first year’s depreciation on Telsan Company’s books. (iv) Record interest expense and lease liability for Telsan…

3. Lessee Capital Lease; Lessor Residual Value - Guaranteed - Instructions: Direct Financing Lease; On January 1, 2010, Velde Company (lessee) entered into a 4 year, noncancellable contract to lease a computer from Exceptional Computer Company (lessor). Annual rentals of $16,228 are to be paid each January 1, Velde will assume responsibility for all normal ownership costs, and at the end of the lease period the computer will be returned back to Exceptional Computer Company. The cost of the computer to Exceptional Computer Company was $60,000 and it had an estimated useful life of four years and a guaranteed residual value of $5,000. Velde has an incremental borrowing rate of 12%, but has knowledge that Exceptional Computer Company used a rate 10% in setting annual rentals. Collection of the rentals is reasonably predictable and there are no important uncertainties regarding future unreimbursable costs to be incurred by the lessor. PVIFAD(10%,4) - 3.48685; PVIF(10%,4) - 0.68301 a. What…

REQUIRED 2) WESTERN SOYA IS FINANCE LEASE, RHONE METRO- SALES-TYPE LEASE NEED ASSITANCE WITH  REQUIRED 1, 3 LESSEE , 3 LESSOR