During the year ended 30 September 2021 Hanlon Plc entered into two lease transactions. On 1 October 2020 Hanlon made a payment of £90,000 being the first of five equal annual payments under a lease for an item of plant. The lease has an implicit interest rate of 10% and the present value of the total lease payments on 1 October 2020 was £340,000 On 1 January 2021, Hanlon made a payment of £18,000 for a one-year lease of an item of equipment. What amount in total would be charged to Hanlon Plc’s statement of profit or loss for the year ended 30 September 2021 in respect of the above transactions
Q: If a company chooses a price to charge for its product by adding up all the expenses necessary to…
A: Solution: There are various method of pricing the product such as: 1. Target costing 2. Skimming…
Q: As the accountant has only recently been recruited you have been asked to complete the preparation…
A: The difference in Accounting for taxes between Financial statements and Tax returns, that creates a…
Q: Problem 10-1 A review of the accounting records of Little H Inc indicated that the company incurred…
A: Selling,General and Administrative Expenses (SG&A) are expenses that are not assigned to a…
Q: Factoring" occurs when a business sells some of its accounts receivable to another insitution so it…
A: Accounts receivables are asset for a business because they can be converted into cash when they…
Q: Can you please help with the last part of the question. Odane Cranston, the management accountant at…
A: Account Receivables- Accounts receivable refers to the situation in which a company sells goods and…
Q: Choo Choo Corp produces and sells a single product whose selling price is $100.00 per unit and whose…
A: The break even sales are the sales where business earns no profit no loss during the period. The…
Q: [S1] Instead of PFRS 17, the standard applicable to contracts that principally transfer financial…
A: Here asked for multi question we will solve for first question for you. If you need additional…
Q: Pau, Inc., which has fixed costs of $51401, sells two products whose sales price, variable cost per…
A: The Break-even point indicates that total units are to be sold by the business entity to recover its…
Q: A comparative Income statement is given below for McKenzie Sales, Limited, of Toronto: McKenzie…
A: Under common size analysis each item of the financial statements is analyzed as a percentage of the…
Q: 2. ABC, Inc. has the following information related to the pension plan. Beginning of the Year 2021…
A: Here discuss about the details of the pension related amortization cost which are incurred for the…
Q: Spero Ticket Co. has two operating departments (Sports and Concerts) and two service centers…
A: Step method of allocation is one of the techniques of allocating the costs of service departments to…
Q: What principal will make a profit of $71.99 at 8 ½% in 200 days?
A: The question is related to the Simple Interest and Principal Simple Interest = P × R × T P =…
Q: FOOD ON THE GO PARTIAL GENERAL LEDGER ACCOUNTS RECEIVABLE Explanation INVENTORY Explanation SALES…
A: 1. Journal entry: When a transaction is made a journal entry is passed to record it. we are…
Q: If the Fed wants to increase the money supply, it can sell bonds in open-market operations. If the…
A: Answer:- "If the Fed wants to increase the money supply, it can sell bonds in open-market…
Q: Ava's Creations sells two products. A and B. The weighted average per unit is $38 and Ava's fixed…
A: Here we will use the break even analysis concept for multiple products. In case of multiple products…
Q: Mr. Amit owns a flat. On 5-4-2020, he decides and starts a business of dealing in sale and purchse…
A: As per section 45 (2) of the income tax act 1961 when the Capital Asset is converted into Stock the…
Q: Explain why the implementation of ERP in a company, especially SAP, can simplify the accounting…
A: Answer:- Auditing meaning:- Auditing can be defined as the verification activity of a process or…
Q: What amount should be reported as cost of goods manufactured?
A: Cost of Goods Manufactured :— It is the total cost incurred during manufacturing of the finished…
Q: On January 1, 20x3, The Rolling Stones (the greatest rock'n'roll band in the history of the world)…
A: Depreciation expense is the reduction in the value of assets due to its use or wear and tear.…
Q: Required a. State two uses of the control accounts b. Use the above data to determine the opening…
A: Control Account Popularly there are two main control account are there one is Debtors control…
Q: Cash Corporation wants to purchase a new machine for $400,000. Management predicts that the machine…
A: Depreciation- Depreciation is the gradual decrease in the value of assets caused by wear and tear.…
Q: There were 5 students performed in the school dance competition and two judges rank their…
A: According to the given question, we are required to compute Spearman's rank correlation coefficient.…
Q: The following information relates to Steele Manufacturing's overhead costs for the month: $35,600…
A: In the business organizations, the benchmark is already established, and the actual performance is…
Q: what is the difference between a debit & a credit?
A: Introduction: Every financial transaction includes both debit and credit. The key notion of the…
Q: 8. The company sold P250,000 goods for P300,000, on account. Terms: 5%, 3/10, 9. In connection with…
A: The journal keeps the record for day to day transactions of the business on regular basis. The…
Q: Calculate the following ratios based on the upcoming data based on the 2021 year-end. 13.1 Current…
A: Disclaimer: “Since you have asked multiple questions, we will solve the first question for you. If…
Q: The following six situations at Diviney Manufacturing Inc. are independent.a. A manual insertion…
A: You have asked multiple questions which are completely different as each situation is different…
Q: (Corporate income tax) Sales for J. P. Hulett Inc. during the past year amounted to $4.3 million.…
A: Tax Liability: Your financial obligation to the government in the form of taxes is referred to as…
Q: Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales for Item Zeta9 are as…
A: Inventory valuation is based on the flow-off issue used by the organization. It can be the first in…
Q: Mr. and Mrs. Grant recognized the following capital gains and losses this year: Short-term capital…
A: Introduction: Annual income is the total value of income earned during a fiscal year. Gross annual…
Q: July 2021, Hard Rock Pty Ltd a small construction business purchased two business assets for the…
A: As the time goes no there is decrease in value of assets with time but there must be sufficient…
Q: [The following information applies to the questions displayed below.] The following information is…
A: The ratio analysis helps to analyse the financial statements of the business. The return on…
Q: Department MJW had no work in process at the beginning of the period. 12,000 units of direct…
A: Equivalent units = Number of units in work in progress * ℅ completion Direct material 100℅…
Q: Prepare Carlton's direct materials budget, direct labor budget, and manufacturing overhead budget…
A: The budgets are prepared on the basis of standard data and further it helps to estimate the costs to…
Q: Wendy Marvel sold $260,000 of its inventory to Carla during 2021 for $400,000. Carla sold $300,000…
A: Calculation of intra entity gross profit Sales = $ 400000 Cost of goods sold= $ 260000 Gm% =…
Q: The return on equity ratio equals net income divided by common stock. True or False
A: In the context of the given question, we are required to comment that the statement is true or…
Q: Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering…
A: Introduction: Differential analysis is a decision-making technique that compares the net…
Q: Universal Sports Supply began the year with an inventory balance of $72,000 and a year-end balance…
A: Introduction: Inventory turnover is a financial indicator that examines the frequency with which a…
Q: Calculate all possible solvency ratios for 2021 and 2020. (Round answers to 1 decimal place e.g.…
A: Debt to assets ratio is ratio between total liabilities and total assets of the business. Free cash…
Q: The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: 1.…
A: Post Closing Trial Balance - Post Closing Trial Balance is the trial balance after providing closing…
Q: I am so lost on this-can you please help? My instructor said I only have to provide a journal…
A: Comment- Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…
Q: On April 1, 2XX1, Globe Corporation, a newly formed company, had the following share capital issued…
A: A) Ordinary share capital:- The amount of Ordinary share capital for Globe Corporation =…
Q: cost of production reports used for controlling andi
A: Cost of production refers to the cost that is incurred on manufacturing the product or providing…
Q: A parent company purchased a 65% controlling interest in its subsidiary several years ago. The…
A: Consolidated financial statements are the financial statements of a group of entities that are…
Q: Year ending 31 March 2022: Key Performance Indicator Financial Revenue growth percentage (average)…
A:
Q: Fee Income Interest Income Salaries Expense Balance of the Sheila James Dancing Studio as of October…
A: financial statement include income statement , balance sheet statement of change in equity and…
Q: Aunt Molly's Old Fashioned Cookies bakes cookies for retail stores. The company's best-selling…
A: Comment- Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…
Q: Please explain above answer how these Factors Influencing The Role Of a Management Accountant.?
A: Every business requires the accountants so that the proper recording and decision making can be made…
Q: Journalize these transactions of september assuimg the perpetual inventory system is being used…
A: Methods of Inventory System: 1. Periodic Inventory System 2. Perpetual Inventory…
Q: To raise operating funds, C Incorporated sold its office building to an insurance company on January…
A: Journal A general journal entry is used to visualize the business transactions of any organization.…
During the year ended 30 September 2021 Hanlon Plc entered into two lease transactions.
On 1 October 2020 Hanlon made a payment of £90,000 being the first of five equal annual payments under a lease for an item of plant. The lease has an implicit interest rate of 10% and the present value of the total lease payments on 1 October 2020 was £340,000
On 1 January 2021, Hanlon made a payment of £18,000 for a one-year lease of an item of equipment.
What amount in total would be charged to Hanlon Plc’s statement of profit or loss for the year ended 30 September 2021 in respect of the above transactions
Step by step
Solved in 3 steps with 1 images
- Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).Lessee Accounting Issues Timmer Company signs a lease agreement dated January 1, 2019, that provides for it to lease equipment from Landau Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: The lease is noncancelable and has a term of 5 years. The annual rentals are 83,222.92, payable at the end of each year, and provide Landau with a 12% annual rate of return on its net investment. Timmer agrees to pay all executory costs directly to a third party on December 1 of each year. In 2019, these were insurance, 3,760; property taxes, 5,440. In 2020: insurance, 3,100; property taxes, 5,330. There is no renewal or bargain purchase option. Timmer estimates that the equipment has a fair value of 300,000, an economic life of 5 years, and a zero residual value. Timmers incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment. Required: 1. Calculate the amount of the asset and liability of Timmer at the inception of the lease. (Round to the nearest dollar.) 2. Prepare a table summarizing the lease payments and interest expense. 3. Prepare journal entries on the books of Timmer for 2019 and 2020. 4. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the present value of next years payment approach to classify the finance lease obligation between current and noncurrent. 5. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the change in present value approach to classify the finance lease obligation between current and noncurrent.Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?
- Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease on January 1, 2019, for nonspecialized equipment that cost the Landlord 280,000 (useful life is 6 years with no residual value). The fair value of the equipment is 300,000. The interest rate implicit in the lease is 14%. The 6-year lease requires 6 equal annual amounts payable each January 1, beginning with January 1, 2019. Tenant pays all executory costs directly to a third party on December 1 of each year. The equipment reverts to the lessor at the termination of the lease. Assume that there are no initial direct costs. Landlord expects to collect all rental payments. Required: 1. Next Level (a) Show how landlord should compute the annual rental amounts, (b) Discuss how the Tenant Company should compute the present value of the lease payments. What additional information would be required to make this computation? 2. Next Level Prepare a table summarizing the lease and interest receipts that would be suitable for Landlord. Under what conditions would this table be suitable for Tenant? 3. Assuming that the table prepared in Requirement 2 is suitable for both the lessee and the lessor, prepare the journal entries for both firms for the years 2019 and 2020. Use the straight-line depreciation method for the leased equipment. The executory costs paid by the lessee are in 2019: insurance, 700 and property taxes, 800; in 2020: insurance, 600 and property taxes, 750. 4. Next Level Show the items and amounts that would be reported on the comparative 2019 and 2020 income statements and ending balance sheets for both the lessor and the lessee, using the change in present value approach.Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: The lease is noncancelable and has a term of 8 years. The annual rentals arc 35,000, payable at the beginning of each year. The interest rate implicit in the lease is 14%. Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for 1 at the end of the lease term, December 31, 2026. The cost of the equipment to the lessee is 150,000, and the fair value is approximately 185,100. Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Ballieu estimates that the fair value is expected to be significantly greater than 1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of 35,000 discounted at 14% is 185,090.68 (the 1 purchase option is ignored as immaterial). Required: 1. Next Level Identify the classification of the lease transaction from Ballices point of view. Give the reasons for your classification. 2. Prepare all the journal entries tor Ballieu for the years 2019 and 2020. 3. Discuss the disclosure requirements for the lease transaction in Ballices notes to the financial statements.Sales-Type Lease with Guaranteed Residual Value Calder Company, the lessor, enters into a lease with Darwin Company, the lessee, to provide heavy equipment beginning January 1, 2017. The lease is appropriately classified as a sales-type lease. The lease terms, provisions, and related events are as follows: The lease is noncancelable, has a term of 8 years, and has no renewal or bargain purchase option. The annual rentals are 65,000, payable at the end of each year. The interest rate implicit in the lease is 15%. Darwin agrees to pay all executory costs directly to a third party. The cost of the equipment is 280,000. The fair value of the equipment to Calder is 308,021.03. Calder incurs no material initial direct costs. Calder expects that it will be able to collect all lease payments. Calder estimates that the fair value at the end of the lease term will be 50,000 and that the economic life the equipment is 9 years. This residual value is guaranteed by Darwin. The following present value factors are relevant: PV of an ordinary annuity n = 8, i = 15% = 4.487322 PV n = 8, i = 15% = 0.326902 PV n = 1, i = 15% = 0.869565 Required: 1. Determine the proper classification of the lease. 2. Prepare a table summarizing the lease receipts and interest income earned by Calder for this lease. 3. Prepare journal entries for Calder for the years 2019, 2020, and 2021. 4. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the present value of next years payment approach to classify the lease receivable as current and noncurrent. 5. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the change in present value approach to classify the lease receivable as current and noncurrent.
- Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on the following terms: 1. Twenty-four lease rentals of 2,950 at the beginning of each month are to be paid by Terrell, and the lease is noncancelable. 2. The cost of the heavy equipment to Ramsey was 55,000. 3. Ramsey uses an implicit interest rate of 18% per year and will account for this lease as a sales-type lease. Required: Prepare journal entries for Ramsey (the lessor) to record the lease contract on March 1, 2019, the receipt of the first two lease rentals, and any interest income for March and April 2019. (Round your answers to the nearest dollar.)
- During the year ended 30 September 2021 Hanlon Plc entered into two lease transactions.On 1 October 2020 Hanlon made a payment of £90,000 being the first of five equal annual payments under a lease for an item of plant. The lease has an implicit interest rate of 10% and the present value of the total lease payments on 1 October 2020 was £340,000On 1 January 2021, Hanlon made a payment of £18,000 for a one-year lease of an item of equipment.What amount in total would be charged to Hanlon Plc’s statement of profit or loss for the year ended 30 September 2021 in respect of the above transactions. Show your calculationsOn 1 July 2020, Table Ltd leased equipment from Chair Ltd. The following are details of the equipment and the lease contract: On 1 July 2020 equipment has a fair value of $110,000 (at fair value in Chair Ltd’s accounts) Lease term is 5 years, useful life of the equipment is 6 years, and Table Ltd will return the equipment at the end of the lease term Lease payments are in advance and will be paid on 1 July of each year, starting 1 July 2020, with $24,000 as the annual payment Residual value of the equipment at the end of the lease term is $8,000, with Table Ltd guaranteeing 75% of the residual value The interest rate implicit in the lease arrangement is 6%. In setting up the lease arrangement Table Ltd incurred costs of $2,354, while Chair Ltd incurred costs of $3,141. Required: a) Prepare the necessary journal entries for Table Ltd on 1 July 2020. b) Calculate interest and depreciation expense incurred on 30 June…On 1 July 2019, Fisher Ltd decides to lease a cargo ship from XFinance Ltd. The term of the lease is 20 years. The implicit interest rate in the lease is 10 per cent. The fair value of the cargo ship at the commencement of the lease is $2,215,560. The lease is non-cancellable, and requires a lease payment of $300,000 on inception of the lease (on 1 July 2019) and lease payments of $250,000 on 30 June each year (starting 30 June 2020). Included within the $250,000 lease payments is an amount of $25,000 representing payment to the lessor for the insurance and maintenance of the cargo ship. There is no residual payment required. Annuity factor, n=20; r = 10% is 8.5136. a) Prove that the interest rate implicit in the lease is 10 per cent.