of current year, an equipment was leased to another entityFrance Company is a dealer in equipment. At the beginningProblem 14-15 (IAA)with the following provisions:Annual rental payable at the end of each yearLease term and useful life of machineryCost of equipmentResidual value-unguaranteedImplicit interest ratePV of an ordinary annuity of 1 at 12% for 5 periodsPV of 1 at 12% for 5 periods1,500,0005 year4,000,000500,00012%3.600.57At the end of the lease term the equipment will revert to thelessor.The entity incurred initial direct cost of P200,000 in finalizingthe lease agreement. 4. What amount should be reported as gross profit on salera. 1,485,000b. 1,685,000c. 3,500,000d. 4,000,000

Leasing seems to be a method that allows a company to receive use of certain capital assets in…

atal payable at the end of each year and useful life of machinery ipment lue-unguaranteed erest rate dinary annuity of 1 at 12% for 5 perioda 2% for 5 periods 1,500.000 Syean 4,000.000 S00,00 12 360 d of the lease term the equipment will revert to

atal payable at the end of each year and useful life of machinery ipment lue-unguaranteed erest rate dinary annuity of 1 at 12% for 5 perioda 2% for 5 periods 1,500.000 Syean 4,000.000 S00,00 12 360 d of the lease term the equipment will revert to

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount should be reported as sales revenue? 7,770,00010,000,0007,200,0007,000,000 What is the interest income for 2023? 932,400864,000840,000880,000
Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount of cost of goods sold should be reported? 5,430,0006,000,0007,000,0007,200,000
France Company is a dealer in equipment. At the beginning of current year, an equipment was leased to another entity Problem 14-15 (IAA) with the following provisions: Annual rental payable at the end of each year Lease term and useful life of machinery Cost of equipment Residual value-unguaranteed Implicit interest rate PV of an ordinary annuity of 1 at 12% for 5 periods PV of 1 at 12% for 5 periods 1,500,000 5 years 4,000,000 500,000 12% 3.60 0.57 At the end of the lease term the equipment will revert to the lessor. The entity incurred initial direct cost of P200,000 in finalizing the lease agreement. 1. What is the gross investment in the lease? a. 7,500,000 b. 8,000,000 c. 4,000,000 d. 4,500,000 2. What is the net investment in the lease? a. - 5,400,000 b. 5,685,000 c. 4,000,000 d. 3,500,000 3. What interest income should be reported for current year? a. 682,200 b. 648,000 c. 900,000 d. 960,000 4. What amount should be reported as gross profit on sale! a. 1,485,000 b. 1,685,000 c.…
On January 1, 2020, an entity leased an equipment for four years at anannual rental of P170,000 payable at the end of each year. The estimateduseful life of the equipment is four years. The present value factor of anordinary annuity of 1 for four years of an implicit rate of 12% is 3.0373. Thelease provides for a transfer of ownership of the equipment to the lesseeat the end of the lease term. Compute for the depreciation expense forthe right of use of asset for the year ended December 31, 2020.
4. What amount should be reported as gross profit on sale? of current year, an equipment was leased to another entity France Company is a dealer in equipment. At the beginning Problem 14-15 (IAA) with the following provisions: Annual rental payable at the end of each year Lease term and useful life of machinery Cost of equipment Residual value-unguaranteed Implicit interest rate PV of an ordinary annuity of 1 at 12% for 5 periods PV of 1 at 12% for 5 periods 1,500,000 5 years 4,000,000 500,000 12% 3.60 0.57 At the end of the lease term the equipment will revert to the lessor. The entity incurred initial direct cost of P200,000 in finalizing the lease agreement. 1. What is the gross investment in the lease? a. 7,500,000 b. 8,000,000 c. 4,000,000 d. 4,500,000 2. What is the net investment in the lease? a. - 5,400,000 b. 5,685,000 c. 4,000,000 d. 3,500,000 3. What interest income should be reported for current year? а. 682,200 b. 648,000 c. 900,000 d. 960,000 a. 1,485,000 b. 1,685,000 c.…
Kobie Company leased an equipment to a lessee on January 2, 2020 undera direct financing lease with the following provisions - cost of equipmentP3,390,000; Annual rental payable at the end of the year P600,000; Usefullife and lease term, 10 years. Kobie Company incurred and paid P143,400 innegotiation and arranging the lease. The present value of an ordinaryannuity of 1 at 12% for 10 years is 5,650 and the present value of anordinary annuity of 1 at 11% for 10 years is 5.889. What is the total financialrevenue to be recognized over the lease term?
An entity leased a machinery with useful life of 10 years on January 1, 2020 for period of 8 years with fixed annual rental of P800,000which is to be paid at the end of each year. The lease contract provides that the lessee has the option to purchase the leased asset atthe end of the lease term by paying P50,000. The estimated residual value of the leased asset at the end of its useful life is P150,000.The lessee is reasonably certain to exercise the bargain purchase option. The implicit interest rate in the lease is 12% and theincremental borrowing rate is 10%. REQUIRED: Prepare table of amortization and journal entries for the entire lease term.
On 30 June 2020, Cambridge Ltd leased a vehicle to Awamutu Ltd. Cambridge Ltd had purchased thevehicle on that day for its fair value of $89,721. The lease agreement, which cost Cambridge Ltd $1,457 tohave drawn up, contained the following provisions:Lease Term 4 yearsAnnual payment, payable in advance on 30 June each year $23,900Economic life of vehicle 6 yearsEstimated residual value at end of economic life 52,000Estimated residual value at end of lease term $15,000Residual value guaranteed by lessee $15,000Interest rate implicit in the lease 7%The lease is cancellable, but cancellation will incur a monetary penalty equivalent to 2 years rentalpayments. Included in the annual payment is an amount of $1900 to cover reimbursement for the costsof insurance and maintenance paid by the lessor. The directors of Awamutu Ltd have indicated that theyare interested in acquiring the asset at the end of the lease.a) Prepare the following for the lessor, Cambridge Ltd:1. the lease receipts…
3. On January 1, 2019, an entity acquired an equipment for P1,000,000 payable in 5 annual installments together with the interest every December 31 of each year. Interest in 10% computed on the outstanding balance. Give the following journal entries: (a) January 1, 2019 for the acquisition of the equipment; (b) December 31, 2019 for the first installment; (c) December 31, 2020 for the second installment; and (d) payment of the promissory note upon maturity on December 31, 2023. *
On 1.1 2016 YZ company leased Equipment from ABC company, the fair value of Equipment OMR680496 and useful life of it 5 years without residual value, the lessee paid rental payments of OMR123000 at the beginning of each year. The lessee's incremental borrowing rate 12%. The interest expense on 13/12/2016 should be: Select one: a. OMR 44831 O b. OMR44351 c. OMR 35451 O d. None of the options
On 1.1 2016 YZ company leased Equipment from ABC company, the fair value of Equipment OMR680496 and useful life of it 5 years without residual value, the lessee paid rental payments of OMR123000 at the beginning of each year. The lessee's incremental borrowing rate 12%. The balance on 1/1/2016 should be: Select one: a. OMR373594 O b. OMR123000 c. None of the options d. OMR474245
On January 1, 2020, an entity leased a machinery with the following data: Annual rental payable at the end of each year for P80,000 with a lease term for 6 years and with an implicit rate of 7%. On January 1, 2023, the entity and the lessor agreed to amend the original terms of the lease by reducing the lease payment to P70,000 and increasing the implicit rate to 9%. Compute for the interest expense to be recognize on January 1, 2023. 15,947 18,968 14,696