On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. The equipment cost Ghosh $957,000 and has an expected useful life of five years. Ghosh expects the residual value at December 31, 2027, will be $301,000. Negotiations led to the lessee guaranteeing a $341,000 residual value. Equal payments under the finance/sales - type lease are $201,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Karrier is aware that Ghosh used a 4% interest rate when calculating lease payments.

On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. The equipment cost Ghosh $957,000 and has an expected useful life of five years. Ghosh expects the residual value at December 31, 2027, will be $301,000. Negotiations led to the lessee guaranteeing a $341,000 residual value. Equal payments under the finance/sales - type lease are $201,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Karrier is aware that Ghosh used a 4% interest rate when calculating lease payments.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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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?
On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh The equipment cost Ghosh $957,800 and has an expected useful life of five years. . Ghosh expects the residual value at December 31, 2027, will be $301,800. . Negotiations led to the lessee guaranteeing a $341,800 residual value Equal payments under the finance/sales-type lease are $201.800 and are due on December 31 of each year with the first payment being made on December 31, 2024 • Karrier is aware that Ghosh used a 5% interest rate when calculating lease payments. . Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease 2. Prepare all appropriate entries for both Karrier and Ghosh on December 31,…
On January 1. 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31,2027 , at which time possession of the leased asset will revert back to Ghosh. - The equipment cost Ghosh$960,000and has an expected useful life of five years. - Ghosh expects the residual value at December 31, 2027, will be$304,000. - Negotiations led to the lessee guaranteeing a$344,000residual value - Equal payments under the finance/sales-type lease are$204,000and are due on December 31 of each year with the first payment being made on December 31, 2024. - Karrier is aware that Ghosh used a4%interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (EV of \$1. PV of \$1. EVA of$1, PVA of S1. FVAD of$1and PVAD of S1) Required: 1. Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease. 2. Prepare all appropriate entries for both Karrier and Ghosh on December 31, 2024,…
On January 1, 2021, Central Industries leased a high-performance conveyer to Dynamic Company for a four-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Central. The equipment cost Central $1,912,000 and has an expected useful life of five years. Central expects the residual value at December 31, 2025, will be $600,000. Negotiations led to the lessee guaranteeing a $680,000 residual value.Equal payments under the finance/sales-type lease are $400,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Dynamic is aware that Central used a 5% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Prepare the appropriate journal entries for both Dynamic and Central on January 1, 2021, to record the lease.2. Prepare all appropriate journal entries for both Dynamic and Central…
On January 1, 2021, Central Industries leased a high-performance conveyer to Dynamic Company for a four-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Central. The equipment cost Central $1,912,000 and has an expected useful life of five years. Central expects the residual value at December 31, 2025, will be $600,000. Negotiations led to the lessee guaranteeing a $680,000 residual value. Equal payments under the finance/sales-type lease are due on December 31 of each year with the first payment being made on December 31, 2021. Dynamic is aware that Central used a 5% interest rate when calculating lease payments.What is the amount that the lessee will record as Right-of-use-Asset and Lease Liability ?
On January 1, 2024, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $779,677 and has an expected economic life of five years. Nevels expects the residual value on December 31, 2027, will be $103,000. Negotiations led to the lessee guaranteeing a $146,000 residual value. Equal payments under the lease are $203,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Nguyen is aware that Nevels used a 8% interest rate when calculating lease payments. 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: Prepare the appropriate entries for both Nguyen and Nevels on January 1, 2024, to record the lease. Prepare all appropriate entries for both Nguyen and Nevels on December 31, 2024, related to the lease.
On January 1, 2024, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $865,757 and has an expected economic life of five years. Nevels expects the residual value on December 31, 2027, will be $121,000. Negotiations led to the lessee guaranteeing a $182,000 residual value. Equal payments under the lease are $221,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Nguyen is aware that Nevels used a 8% interest rate when calculating lease payments.
On January 1, 2024, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $794,023 and has an expected economic life of five years. Nevels expects the residual value on December 31, 2027, will be $106,000. Negotiations led to the lessee guaranteeing a $152,000 residual value. Equal payments under the lease are $206,000 and are due on December 31 of each year with the first payment being made of December 31, 2024. Nguyen is aware that Nevels used a 8% interest rate when calculating lease payments. 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. Prepare the appropriate entries for both Nguyen and Nevels on January 1, 2024, to record the lease. 2. Prepare all appropriate entries for both Nguyen and Nevels on December 31, 2024, related to the lease. >…
On January 1, 2024, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $794,023 and has an expected economic life of five years. Nevels expects the residual value on December 31, 2027, will be $106,000. Negotiations led to the lessee guaranteeing a $152,000 residual value. Equal payments under the lease are $206,000 and are due on December 31 of each year with the first payment being made o December 31, 2024. Nguyen is aware that Nevels used a 8% interest rate when calculating lease payments. 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. Prepare the appropriate entries for both Nguyen and Nevels on January 1, 2024, to record the lease. 2. Prepare all appropriate entries for both Nguyen and Nevels on December 31, 2024, related to the lease.…
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On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $412,184 and has an expected economic life of five years. Aqua expects the residual value at December 31, 2024, to be $50,000. Negotiations led to Maywood guaranteeing a $70,000 residual value. Equal payments under the lease are $100,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 5% interest rate when calculating lease payments.Required:1. Prepare the appropriate entry for Maywood on January 1, 2021, to record the lease.2. Prepare all appropriate entries for Maywood on December 31, 2021, related to the lease.
On January 1, 2018, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $425660 and has an expected economic life of six years. Aqua expects the residual value at December 31, 2021, to be $62,000. Negotiations led to Maywood guaranteeing a $88,000 residual value. Equal payments under the lease are $124,000 and are due on December 31 of each year with the first payment being made on December 31, 2018. Maywood is aware that Aqua used a 6% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:1. & 2. Prepare the appropriate entries for Maywood on January 1, 2018 and December 31, 2018, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first…