Godo Current Attempt in ProgressIn 2024, Nash Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freightstorage facilities. The buildings were erected to the company's specifications on land owned by another company. On January 1, 2025,Nash Trucking took possession of the leased properties.Although the terminals have a composite useful life of 40 years, the non-cancelable lease runs for 20 years from January 1, 2025, witha bargain purchase option available upon expiration of the lease.The 20-year lease is effective for the period January 1, 2025, through December 31, 2044. Rental payments of $864,000 are payableto the lessor on January 1 of each of the first 10 years of the lease term. Advance rental payments of $345,600 are due on January 1for each of the last 10 years of the lease. The company has an option to purchase all of these leased facilities for $1 on December 31,2044. The lease was negotiated to assure the lessor a 6% rate of return.Selected present value factors are as follows.For an OrdinaryPeriods Annuity of $1 at 6%12891019200.9433961.8333936.2097946.8016927.36008711.15811711.469921For $1 at 6%0.9433960.8899960.6274120.5918980.5583950.3305130.311805 Assuming that the present value of terminal facilities and related obligation at January 1, 2025, was $8,246,243, prepare journalentries for Nash Trucking to record the: (Credit account titles are automatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places,e.g. 125. List all debit entries before credit entries.)(1)(2)(3)No. Account Titles and Explanation1.2.Cash payment to the lessor on January 1, 2027.Amortization of the cost of the leased properties for 2027, using the straight-line method and assuming a zero salvagevalue.Accrual of interest expense at December 31, 2027.3.Debit|_Credit

An agreement of contract that is prepared to transfer the right to use the resources for a…

In 2024, Nash Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company's specifications on land owned by another company. On January 1, 2025, Nash Trucking took possession of the leased properties. Although the terminals have a composite useful life of 40 years, the non-cancelable lease runs for 20 years from January 1, 2025, with a bargain purchase option available upon expiration of the lease.

In 2024, Nash Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company's specifications on land owned by another company. On January 1, 2025, Nash Trucking took possession of the leased properties. Although the terminals have a composite useful life of 40 years, the non-cancelable lease runs for 20 years from January 1, 2025, with a bargain purchase option available upon expiration of the lease.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.5P

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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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