NEED ASSISTANCE WITH ONLY LAST 3 PARTS* REQUIRED 2 LESSEE, REQUIRED 2 LESSOR, REQUIRED 3 Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians'Leasing purchased a lithotripter from Rand for $2,050,000 and leased it to Mid-South Urologists Group, Inc., on January 1, 2021. (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.)Lease Description:Quarterly lease payments$122,913-beginning of each period5 years (20 quarters)Lease termNo residual value; no purchase optionEconomic life of lithotripterImplicit interest rate and lessee's incremental borrowing rate5 years8%Fair value of asset$2,050, e00Required:1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing?2. Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the beginning of the lease throughthe second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31).3. Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced themachine at a cost of $1.7 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through the secondlease payment on April 1, 2021.

A lease is a contract that outlines the terms under which one party agrees to rent a property – in…

Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,050,000 and leased it to Mid-South Urologists Group, Inc., on January 1, 2021. (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.) Lease Description: Quarterly lease payments $122,913-beginning of each period 5 years (20 quarters) Lease term No residual value; no purchase option Economic life of lithotripter Implicit interest rate and lessee's incremental borrowing rate Fair value of asset 5 years 8% $2,050,e00 Required: 1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing? 2. Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the beginning of the lease through the second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31). 3. Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the machine at a cost of $1.7 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through the second lease payment on April 1, 2021.

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 4RE