Hw.121. On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease forthree years.• Rick's had no significant economic Incentive as of the beginning of the lease to exercise the three-year extension option. Annuallease payments are $13,000 due on December 31 of each year, calculated by the lessor using a 4% discount rate.• The expected useful life of the asset is nine years, and Its fair value is $97,500.• Assume that at the beginning of the third year, January 1, 2026, Rick's had made significant improvements to the truck whosecost could be recovered only If It exercises the extension option, creating an expectation that extension of the lease was"reasonably certain."• The relevant interest rate at that time was 5%.Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1)Required:1. Prepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessee to account for thereassessment.2. Prepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessor to account for thereassessment. Required 1Prepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessee to account forthe reassessment.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Roundyour intermediate and final answers to nearest whole dollar.NINView transaction listNo1232DateJanuary 01,2026No1View journal entry worksheetDecember 31,2026December 31,2026Required 2View transaction listRight-of-use assetLease payableDateJanuary 01,2028General JournalInterest expenseAmortization expensePrepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessor to account forthe reassessment.December 31,2026Interest expenseAmortization expenseNote: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Roundyour intermediate and final answers to nearest whole dollar.View journal entry worksheetInterest expenseLease payableCashDebitGeneral JournalAmortization expenseRight-of-use assetCreditDebitShow lessACreditⒸShow lessA

As per IFRS 16, Any change in the lease terms during the lease period may be accounted as a seperate…

1. Prepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessee to account for the reassessment. 2. Prepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessor to account for the reassessment.

1. Prepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessee to account for the reassessment. 2. Prepare the journal entry, if any, on January 1 and on December 31 of the third year, 2026 for the lessor to account for the reassessment.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 7MC: Using the information provided, what transaction represents the best application of the present...

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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?
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