On January 1, 2023, Bramble Ltd. entered into an agreement to lease a truck from Wildhorse Ltd. Both Bramble and Wildhorse use IFRS. The details of the agreement are as follows: Carrying value of truck for Wildhorse Fair value of truck Economic life of truck Lease term Rental payments (at beginning of each month) $22,839 $22,839 5 years 3 years $690
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- Communication S.A. signed a contract with Satellite Leasing Corporation at 1st January 2019 to lease a machine. The agreement consists in nine equal annual payments of $18,000 at the beginning of each year with an interest rate of 5%. The yearly rental payment includes $3,000 of executory costs related to taxes on the machine. There is an option to purchase the machine at the end of the lease term for $5,000. The machine has an estimated useful life of 10 years, no residual value and uses straight line depreciation method. Consider a PVIF (n=9, i=5%) of 0.6446 and PVIFA (n=9, i=5%) of 7.1078. The accounting balance day for Communication S.A. is 31 of December. Required a) Calculate the present value of the minimum lease payment. b) Prepare the journal entries for the lessee to reflect the signing of the lease agreement, payment and expenses for the year 2019. c) Prepare the journal entries for the lessor to reflect the signing of the lease agreement, payment and revenues for…Communication S.A. signed a contract with Satellite Leasing Corporation at 1st January 2019 to lease a machine. The agreement consists in nine equal annual payments of $18,000 at the beginning of each year with an interest rate of 5%. The yearly rental payment includes $3,000 of executory costs related to taxes on the machine. There is an option to purchase the machine at the end of the lease term for $5,000. The machine has an estimated useful life of 10 years, no residual value and uses straight line depreciation method. Consider a PVIF (n=9, i=5%) of 0.6446 and PVIFA (n=9, i=5%) of 7.1078. The accounting balance day for Communication S.A. is 31 of December. Required a) Calculate the present value of the minimum lease paymentOn January 1, 2019, Q Co. contracted for the construction of a building for 20,000,000 on land that it had previously purchased. The building was completed on December 31, 2019. The following payments were made to the contractor: Payment date AmountJanuary 1. 2,000,000March 1. 6,000,000August 30. 10,000,000December 1. 2,000,000 The following represents the borrowings of Q Co. as of December 31, 2019:• 10%, 7,000,000, 4-year note dated January 1, 2019 with simple interest payable annually, specifically borrowed to finance the construction project. Interest income earned on the temporary investment of the proceeds is 120,000.• 10%, 10,000,000, 10-year note dated January 1, 2019 with interest payable annually.•12.5%, 15,000,000, 10-year note dated December 31, 2018 with interest payable annually. The building is estimated to have useful life of 20 years and a residual value of 1,482,500. The Building is…
- On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from Builders, Incorporated The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $512,709 over a 5-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is 12.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $3.5 million. 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: 1. Determine the price at which Builders is "selling" the equipment (present value of the lease payments) on June 30, 2024. 2. What amount related to the lease would Builders report in its balance sheet on December 31, 2024 (ignore taxes)? 3. What line item amounts related to the lease would Builders report in its income statement for the year ended…On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from Builders, Incorporated The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $545,210 over a 4-year lease term (also the asset’s useful life), payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is 10.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $3.2 million. 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) Determine the price at which Builders is “selling” the equipment (present value of the lease payments) on June 30, 2024. What amount related to the lease would Builders report in its balance sheet on December 31, 2024 (ignore taxes)? What line item amounts related to the lease would Builders report in its income statement for the year ended December 31, 2024…TBTF Incorporated rents commercial real state to locally based businesses. TBTF purchased a large office complex on January 2, 2022. In exchange for the real estate, TBTF issued a noninterest bearing note to the seller. This note will be paid in equal instalments that include both principal and interest at the end of each calendar year. Other information pertaining to the purchase of the real estate follows: Annual instalment payment amount Market rate of borrowing for TBTF Number of years note will be outstanding Portion of the purchase price to be allocated to land Portion of the purchase price to be allocated to land improvements $ 253,134 8% 9 24% 14% TBTF has a year end date of December 31. Required: Prepare the journal entries required by TBTF to account for the note on each of the following dates: January 2, 2022 December 31, 2024
- On January 1, 2021, Fingerstyle Co. (lessee) enters into a ten-year lease of equipment, with fixed annual payments of P200,000 due at the start of each lease year. The contract itemizes the fixed annual payments as follows: P156,000 for rent, P39,000 for maintenance and P5,000 of administrative tasks. The itemized amounts reflect the relative stand-alone prices of the components. The lessor's implicit interest rate in the lease, known to Fingerstyle Co., is 10%. Compute the total lease-related expenses for 2021?On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor) that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years. The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed by subsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term. Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)a. What amount of lease liability will be recorded by Baal on January 1, 2020? (Round off present value factors to four decimal places,…In 2018, SM Residences entered into a 3-year agreement in to construct a condominium project for a contract price of SM recognizes construction contract under the percentage of completion method. For the year ended 2018, the following balances were found in SM’s books: Progress Billings P2,000,000; Accounts Receivable P1,000,000; Construction in Progress P3,500,000, Costs incurred to date P2,800,000. For 2019, the balances are Progress Billings P3,000,000; Accounts Receivable P1,200,000; Construction in Progress P6,500,000, Costs incurred to date 5,500,000. What is the percentage of completion in 2019?
- On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor)that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years.The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed bysubsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term.Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Unit 4 Exercise Worksheet2Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)a. What amount of lease liability will be recorded by Baal on January 1, 2020? (Round off presentvalue factors to…On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor)that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years.The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed bysubsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term.Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Prepare an amortization table for the lease liability.A. On January 1, 2020, Machinery Corp. enters into a contract with a customer for the sale of a machine and relatedone-yearmaintenance services for a total contract price of P2,000.000. Machinery Corp. regulariy sells these items separately. If they were to be purchased separately, their stand-alone selling prices are as follows: • P1,800,000 for the machine; and P600,000 for the one-year maintenance services Machinery Corp transfesthe machine, andcolects the total contract price, on February 1, 2020. The maintenance services start on that date. Required: Analyze the five steps of model of revenue recognition.