25. On January 1, 20X0, ABC company signed a 12-year lease for warehouse space. ABC has an option to renew the lease for an additional 8 year period on or before January 1, 20X4. during January 20X2, ABC made substantial improvements to the warehouse. The cost of these improvements was P540, 000, with an estimated useful life of 15 years. On December 31, 20X2, ABC intended to exercise the renewal option. ABC has taken a full year’s depreciation on this leasehold improvement. In the December 31, 20X2 statement of financial position, what is the carrying amount of the leasehold improvement?

25. On January 1, 20X0, ABC company signed a 12-year lease for warehouse space. ABC has an option to renew the lease for an additional 8 year period on or before January 1, 20X4. during January 20X2, ABC made substantial improvements to the warehouse. The cost of these improvements was P540, 000, with an estimated useful life of 15 years. On December 31, 20X2, ABC intended to exercise the renewal option. ABC has taken a full year’s depreciation on this leasehold improvement. In the December 31, 20X2 statement of financial position, what is the carrying amount of the leasehold improvement?

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

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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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?
Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.
January 1, 20X1, Sans Serif Publishers, Inc., a computer services and printing firm, leased a color copier from CompuDec Corporation. The lease agreement specifies four annual payments of $100,000 beginning January 1, 20X1, the inception of the lease, and at each January 1 through 20X4. The useful life of the copier is estimated to be six years and depreciated on a straight-line basis. Before deciding to lease, Sans Serif considered purchasing the copier for its cash price of $479,079. If funds were borrowed to buy the copier, the interest rate would have been 10%. Sans Serif uses US GAAP What amounts of lease asset and lease liability are reported at December 31, 20X1? What amount of expenses are incurred due to this lease for the year ended at December 31, 20X1?
January 1, 20X1, Sans Serif Publishers, Inc., a computer services and printing firm, leased a color copier from CompuDec Corporation. The lease agreement specifies four annual payments of $100,000 beginning January 1, 20X1, the inception of the lease, and at each January 1 through 20X4. The useful life of the copier is estimated to be six years and depreciated on a straight-line basis. Before deciding to lease, Sans Serif considered purchasing the copier for its cash price of $479,079. If funds were borrowed to buy the copier, the interest rate would have been 10%. If Sans Serif uses IFRS How should this lease be classified? What amounts of lease asset and lease liability are reported at December 31, 20X1? What amount of expenses are incurred due to this lease for the year ended at December 31, 20X1?
January 1, 20X1, Sans Serif Publishers, Inc., a computer services and printing firm, leased a color copier from CompuDec Corporation. The lease agreement specifies four annual payments of $100,000 beginning January 1, 20X1, the inception of the lease, and at each January 1 through 20X4. The useful life of the copier is estimated to be six years and depreciated on a straight-line basis. Before deciding to lease, Sans Serif considered purchasing the copier for its cash price of $479,079. If funds were borrowed to buy the copier, the interest rate would have been 10%. If Sans Serif uses US GAAP How should this lease be classified? What amounts of lease asset and lease liability are reported at December 31, 20X1? What amount of expenses are incurred due to this lease for the year ended at December 31, 20X1?
32... On January 1, 2017, Metlock Corporation signed a 3-year noncancelable lease for several computers. The terms of the lease called for Metlock to make annual payments of $4,500 at the beginning of each year, starting January 1, 2017. The computers have an estimated useful life of 3 years and a $480 unguaranteed residual value. The computers revert back to the lessor at the end of the lease term. Metlock uses the straight-line method of depreciation for all of its property, plant, and equipment. Metlock’s incremental borrowing rate is 11%, and the lessor’s implicit rate is unknown. (a) Compute the present value of the minimum lease payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) Present Value $enter the Present Value in dollars
7,,,new,,,b,c,d...continues Sage Industries and Pronghorn Inc. enter into an agreement that requires Pronghorn Inc. to build three diesel-electric engines to Sage’s specifications. Upon completion of the engines, Sage has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2020, and requires annual rental payments of $405,443 each January 1, starting January 1, 2020.Sage’s incremental borrowing rate is 8%. The implicit interest rate used by Pronghorn and known to Sage is 7%. The total cost of building the three engines is $2,685,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Sage depreciates similar equipment on a straight-line basis. At the end of the lease, Sage assumes title to the engines. Collectibility of the lease payments is probable.Click here to view factor tables. (a) Your answer has been saved. See…
10. On January 1, 2019, Amaya company signed a 12 year lease for warehouse space. The entity has an option to renew the lease for an additional 8-year period on or before January 1, 2022. During January 2021, the entity made substantial improvement to the warehouse. The cost of the improvement was 972,000 with an estimated useful life of 15 years. On December 31, 2021, the entity intended to exercise the renewal option. The entity has taken a full year depreciation on this leasehold improvement for 2021. On December 31, 2021, what is the carrying amount of the leasehold improvement?
On January 1,2021, Ames Company signed an eight-year lease for office space. The entity had the option to renew the lease for an additional four-year period on or before January 1, 2028. In early January 2021, the entity incurred the following costs: •P1,200,000 for general improvements to the leased premises with an estimated useful life of ten years. •P500,000 for office furniture and equipment with an estimated useful life of ten years. •P400,000 for moveable assembly line equipment with useful life of 5 years. On December 31,2021, the entity's intention as to exercise of the renewal option are uncertain. What amount should be reported as accumulated depreciation of leasehold improvements on December 31,2021?
52-53 On August 1, 2019, Pha Aviation leased two helicopters from Wayo Aircraft for an initial period of 12 months with a provision for a continuation of a month-to-month basis. The lease is property classified under a low value asset. Lease payments are to be made as follows:1st two months - P15,000 per monthNext three months - P12,000 per monthNext three months - P10,000 per monthLast four months - P 7,500 per monthAfter the first year, the rent continues at P6,000 per month. a. How much is Pha Aviation’s rent expense for the year ended December 31, 2019?A. P10,500 B. P52,500 C. P66,000 D. P126,000 b. How much is Pha Aviation’s prepaid rent balance at December 31, 2019?A. P13,500 B. P23,500 C. P55,500 D. P66,000
On January 1, 2024, Robertson Construction leased several items of equipment under a two-year operating lease agreement from Jamison Leasing, which routinely finances equipment for other firms at an annual interest rate of 5%.The contract calls for four rent payments of $43,000 each, payable semiannually on June 30 and December 31 each year. The equipment was acquired by Jamison Leasing at a cost of $363,000 and was expected to have a useful life of 6 years with no residual value. Both firms record amortization and depreciation semi-annually. 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: Prepare the appropriate journal entries for the lessee from the beginning of the lease through the end of 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to the nearest whole dollar
On January 1, 2024, Robertson Construction leased several items of equipment under a two-year operating lease agreement from Jamison Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $58,000 each, payable semiannually on June 30 and December 31 each year. The equipment was acquired by Jamison Leasing at a cost of $378,000 and was expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semi-annually. Required: Prepare the appropriate journal entries for the lessor (Jamison Leasing) from the beginning of the lease through the end of 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Record the first payment received by Jamison Leasing. Record the amortization or depreciation expense for Jamison Leasing. Record the second payment received by Jamison Leasing.…