financial position as of December 31, 20x1 reported a lease liability of P1,066,986, net of current portion. Lease payments of P200,000 are due every January 1st of the year. Calm Co.s incremental borrowing rate is 11% and the lessor's implicit rate, which is known to Calm Co., is 10%. What amount of lease liability, net of current portion, should Calm Co. report on December 31, 20x2? a. 871,052 b. 973,685 c. 986,986 d. 1,066,986
Q: Captain Jack Sparrow exchanges qualified property, basis of $25,000 and fair market value of…
A: Investment Gain or loss: Subtract the selling price from the original purchase price to arrive at…
Q: 11. Kier has a salary of $202, 020, 020 this year, Next year, his salary will increase by 300%. The…
A: Current salary = $202,020,020 Year 1 growth rate = 300% Year 2 growth rate = -75%
Q: When Should Michael Pay Housing Costs? On April 1 of next year, Michael is purchasing a $225,000…
A: The LTV ratio is calculated using the following formula: LTV =Principal amountMarket Value of the…
Q: Shown below is activity for one of the products of Denver Office Equipment: January 1…
A: Lets understand the basics. In FIFO basis company assumes that, goods comes first in the inventory…
Q: the parent.
A: A consolidated financial statement is inclusive of all the subsidiary companies where the owner has…
Q: SkyChefs, Incorporated, prepares in-flight meals for a number of major airlines. One of the…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Required Information [The following information apples to the questions displayed below.] The…
A: LEONE COMPANY Schedule of Cost of Goods Manufactured For the Year Ended December 31, 2019…
Q: Pepa Madrigal has operated a very successful bakery for 30 years, and has accumulated investment…
A: Rate of tax = 12% Single taxpayer from 10276 to 41775 is taxed at the rate of 12%.
Q: On May 1, 20x1, ABC Inc acquired most of the outstanding shares of XYZ Co for cash. The incomplete…
A: The correct answer for the above mentioned question is given in the following steps for your…
Q: Crane Company reported net income of $470000 for the year ended 12/31/21. Included in the…
A: The cash flow statement is the one prepared by the company as a part of the financial statement to…
Q: Even though most corporate bonds in Canada and the United States make coupon payments semiannually,…
A: The bond price is calculated as present value of cash flows from the bond
Q: Replacement Analysis St. Johns River Shipyards' welding machine is 15 years old, fully depreciated,…
A: Replacement Analysis Replacement analysis is the analysis in capital budgeting. An asset's life may…
Q: On May 1, 20x1, ABC Inc acquired most of the outstanding shares of XYZ Co for cash. The incomplete…
A: Goodwill is the intangible asset of the company that is presented on the balance sheet of the…
Q: Given the building layout for St C, and Store D, what portion c security costs should be appor
A: When the a person meant of cost is done then the distribution of cost items in proportion to the…
Q: 21. A machine costs P60,000 and the salvage value is P10,000 after 10 years. Find the book value…
A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…
Q: Question 1.2 Following are the account balances for the DC Company in 2018: Beginning of 2018 Ending…
A: 1. Cost of goods manufactured CALCULATION PARTICULAR WORKING AMOUNT ($) Raw…
Q: Using formal journal entry form journalize the above transaction.
A: Cost of long-term asset = $50,000 Accumulated depreciation = $25,000 Carrying value of long-term…
Q: Soledad decides to save P2,700 at the end of every 6 months, which is the amount paid into her…
A: Future Value = P x [{(1 + r)^n} - 1] / r Here, P = Periodic Payment i.e. P2700 r = Periodic Interest…
Q: Pepa Madrigal has operated a very successful bakery for 30years, and has accumalated investment that…
A: When the income is from 10267 to 41775 then tax is 12%.
Q: he percenta
A: Consolidated net income is the income of the parent company which does not include any income from…
Q: Weighted Average Method, Journal Entries Muskoge Company uses a process-costing system. The company…
A: 1 A) Physical flow schedule for M department Particular Amount Units to accounts for Units…
Q: Oblivion Corporation produced 10,000 units of Product A during the month of November. Costs incurred…
A: Absorption cost includes all the costing that is associated with production process whereas in…
Q: 13. The large deficit in Chicago's revolving funds was due to an accounting systems problem that…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Newton Company is involved in litigation regarding a faulty The entity has consulted with an…
A: Litigation expenses: The amount of charges incurred by the defending party while involving in a…
Q: What is the total relevant cost of reworking the defective units?
A: Answer: a. $2,250
Q: Norfarina Company reported P5,000,000 of inventory on December 31, 2021, based on physical count.…
A: Introduction a. The goods here should be included since it is not yet picked up by the delivery…
Q: Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2019 to $9.2 million…
A: Spontaneous Current Liabilities = Accounts Payable + Accruals = $450,000 + $450,000 = $900,000 Net…
Q: You have following information on the Bank of Morrisland: it currently holds a total of $150 million…
A: Assets Amount ($ ) Current: Loans to customers 150 million Treasury securities…
Q: What is the personal responsibility of a owner in a private limited company?
A: Definition of Private Company A private company is a firm held under private ownership. Private…
Q: What is meant by diffusion? Why it is important in the context of a technological innovation
A: Diffusion is considered when important part in understanding markets and characteristic of isigment…
Q: Pls answer the all questions with solutions 10. Wint Clothing Store had a balance in the Accounts…
A: 10. Average Collection Period = 365 x Average Accounts Receivable / Net Credit Sales 11. Receivable…
Q: makes three products within their single facility. Data concerning these products follow:…
A: Variable cost refers to the expense that adapts to change to change in the level of output generated…
Q: Meredith Snelson started Campus Pizzeria, Inc. on August 1, 1998. Transactions for August are: 1.…
A: Income statement is a financial statement that shows you that company's income and expenditure.it…
Q: 4.20 P33.00 1,250,000 2.100,000 P16.500.000 Fixed Total cost Fixed manufacturing overhead is…
A: Here question related with the calculation of total relevant cost which are incurred in the special…
Q: QUESTION 6 The Sweet Dairy Air, Inc., makes and sells ice cream cones. Management is trying to…
A: The question is related to decision making. In decision-making only relevant costs are considered. A…
Q: Determine the goodwill on the December 31, 2021 consolidated balance sheet.
A: Assets & liabilities to be recorded in the books of purchasing company at the value at which the…
Q: re mixed costs treated? Answer:
A: Mixed Cost - Mixed cost is the combination of two categories of costs, namely fixed and variable…
Q: Compute for the consolidated expenses to be reported for the year. On January 1, ABC Acquired 60…
A: Consolidation is a process where income statement and balance sheet of BB (parent) and SS…
Q: acquired
A: Fair value of XYZ’s machine and equipments shall be equal to the book value less adjustments not…
Q: On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash…
A: For determining the net income/(net loss) attributable to the controlling interest (NCI), we have to…
Q: Wilson Johnson, a childhood, friend has asked you to assist with his personal finances. Single and…
A: Personal Cash flow statement reflects the cash inflows and outflows of an individual in order to…
Q: 1. If a company obtains two salable products from the refining of one ore, the refining process…
A: In the given question, different scenarios are mentioned related to salable products, these…
Q: Avery Bhd. has provided the following trial balance (extract) as at 30 June 2021. Dr Cr RM'000…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: 17. Complete the following balance sheet. Cash S30,000 Accounts Receivable $2,000 Inventory $5,000…
A: Introduction: Balance sheet: All Assets and liabilities and liabilities are shown in Balance sheet.…
Q: Attached is an image of the data for the month to assist with the question) The company produces the…
A: Under absorption costing, the actual cost spent on the unit produces or sold is allocated to that…
Q: describe the costs associated with tangible and intangible assets, and the methods of expensing…
A: Tangible Assets: Intangible assets are tangible assets that can be touched or felt. They include…
Q: Determine the consolidated expenses to be reported for the year.
A: Consolidated expenses are those expenses which has been incurred by the company which has been…
Q: A petty cash fund is
A: Introduction: The petty cash book is a detailed record of tiny monetary transactions. Rather of…
Q: Carla Vista Lighting had a beginning inventory of 18 units at a cost of $7 per unit on August 1.…
A: Solution: Under FIFO method of inventory costing, inventory purchased first is considered as sold…
Q: Cost of long-term asset = $50,000 Accumulated Depreciation = $25,000 Sales price of L-T asset =…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
correct answer is letter b, can u please help me explain why why?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease of equipment entered into on March 1, 2019. The lease is classified as a sales-type lease by the lessor (Anson Company) and as a finance lease by the lessee (Bullard Company). Assume that the lease payments are nude at the beginning of each month, interest and straight-line depreciation are recognized at the end of each month, and the residual value of the leased asset is zero at the end of a 3-year life. Required: 1. Record the lease (including the initial receipt of 2,000) and the receipt of the second and third installments of 2,000 in Ansons accounts. Carry computations to the nearest dollar. 2. Record the lease (including the initial payment of 2,000), the payment of the second and third installments of 2,000, and monthly depreciation in Bullards accounts. The lessee records the lease obligation at net present value. Carry computations to the nearest dollar.Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for Sax. 2. The computers have an estimated life of 5 years, a fair value of 300,000, and a zero estimated residual value. 3. Sax agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. The annual payment is set by Appleton at 83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate. Saxs incremental borrowing rate is 10%. 6. Sax uses the straight-line method to record depreciation on similar equipment. Required: 1. Next Level Examine and evaluate each capitalization criteria and determine what type of lease this is for Sax. 2. Calculate the amount of the asset and liability of Sax at the inception of the lease (round to the nearest dollar). 3. Prepare a table summarizing the lease payments and interest expense. 4. Prepare journal entries for Sax for the years 2019 and 2020.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.
- 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.Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of 20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is 68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Executory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020.Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee). Required: 1. Assuming that the lease is a sales-type lease, calculate the selling price. 2. Prepare a table summarizing the lease receipts and interest income earned by Edom. 3. Prepare journal entries for Edom tor the years 2019 and 2020.
- On December 31, 2021, Take it Easy Co. Leased an equipment with a cost of P1,000,000 to DesperadoCo. for4years which is also the useful life of the asset. The lease agreement specificies equal annual paymentofP261,694 beginning on December 31, 2021. At the end of the lease term, the equipment will revert toTakeitEasy Co. A third party related to the lessee guarantees residual value of the equipment amountingtoP150,000.The rate implicit on the lease is 11%. 1. How much is the total interest income to be earned over the lease term?a. P46,775 c. P196,775b. P103,225 d. P1,172,9272. How much is the interst income in 2022?a. P24,597 c. P81,214b. P61,361 d. P110,000ABC Co. is engaged in the leasing business. As a lessor, ABC expects a 12% return. At the end of the lease term, the leased asset will revert to ABC Co.On Jan. 1, 2022, an equipment is leased to another entity under a direct financing lease.The following are the terms of the lease:Cost of equipment to ABC - P4.4M;Unguaranteed residual value - P320,000;Annual rental payable in advance - P767,600;Useful life and lease term - 8 years;Interest rate implicit in the lease - 12%;First lease payment - January 1, 2022PV factors:PV of 1 at 12% for 8 periods - 0.40;PV of an ordinary annuity of 1 at 12% for 8 periods - 4.97;PV of an ordinary annuity of 1 at 12% for 7 periods - 4.56;PV of an annuity of 1 in advance at 12% for 8 periods - 5.56What is the unearned interest income on January 1, 2022?ABC Co. is engaged in the leasing business. As a lessor, ABC expects a 12% return. At the end of the lease term, the leased asset will revert to ABC Co. On Jan. 1, 2022, an equipment is leased to another entity under a direct financing lease. The following are the terms of the lease: Cost of equipment to ABC-P4.4M Unguaranteed residual value - P320,000; Annual rental payable in advance - P767,600; Useful life and lease term- 8 years: Interest rate implicit in the lease - 12% First lease payment - January 1, 2022 PV factors: PV of 1 at 12% for 8 periods - 0.40; PV of an ordinary annuity of at 12% for 8 periods - 4.97; PV of an ordinary annuity of 1 at 12% for 7 periods - 4.56 PV of an annuity of 1 in advance at 12% for 8 periods -5.56 What is the unearned interest income on January 1, 2022? 1,293,200 1,420,800 1,740,800 2,060,800 1,228,000
- On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance 2021 243,270 2021 22,000 22,000 221,270 2022 22,000 17,702 4,298 216,972 2023 22,000 17,358 4,642 212,330 2024 22,000 16,986 5,014 207,316 2025 22,000 16,585 5,415 201,901 2026 22,000 16,152 5,848 196,053 — — — — — — — — — — — — — — — 2038 22,000 7,274 14,726 76,198 2039 22,000 6,096 15,904 60,294 2040 22,000 4,824 17,176…O On January 1, 2024, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing’s lease amortization schedule appear below: January 1 Payments Effective Interest Decrease in Balance Outstanding Balance $ 314,048 2024 $ 24,000 $ 24,000 $ 290,048 2025 $ 24,000 $ 14,502 $ 9,498 $ 280,550 2026 $ 24,000 $ 14,028 $ 9,972 $ 270,578 2027 $ 24,000 $ 13,529 $ 10,471 $ 260,107 2028 $ 24,000 $ 13,005 $ 10,995 $ 249,112 2029 $ 24,000 $ 12,456 $ 11,544 $ 237,568 2030 $ 24,000 $ 11,878 $ 12,122 $ 225,446 — — — — — — — — — — — — — — — 2041 $ 24,000 $ 11,272 $ 12,728 $ 44,627 2042 $ 24,000 $ 2,231 $ 21,769 $ 22,858 2043 $ 24,000 $ 1,143 $ 22,857 $ 0 Required: What is Majestic’s lease liability at the beginning of the lease (after the first payment)? What…Eubank Company, as lessee, enters into a lease agreement on July 1, 2018, for equipment. The following data are relevant to the lease agreement: The term of the noncancelable lease is 4 years, with no renewal option. Payments of $978,446 are due on July 1 of each year. The fair value of the equipment on July 1, 2018 is $3,500,000. The equipment has an economic life of 6 years with no salvage value. Eubank depreciates similar machinery it owns on the double-declining balance basis. The lessee pays all executory costs. Eubank’s incremental borrowing rate is 10% per year. The lessee is aware that the lessor used an implicit rate of 8% in computing the lease payments (present value factor for 4 periods at 8%, 3.57710; at 10%, 3.48685). Instructions (a) Indicate the type of lease Eubank Company has entered into and what accounting treatment is applicable. This is a capital lease; therefore, it should be accounted for by the capital lease method. (b) Prepare the journal…