Rex Corporation (lessor) and Lee Company (lessee) agreed to a lease with the following information. • Rex's carrying value of the underlying asset (inventory item) was $192,000. • Lease term is four years, beginning January 1 of Year 1. Lease payments are made each January 1, beginning at the lease commencement. • Estimated useful life of the underlying asset is four years. Estimated residual value at the end of the lease is zero. • Sales price of the underlying asset on January 1 of Year 1 is $220,800. • Rex's implicit interest rate is 8% (known to Lee). • Rex paid commission and legal fees in securing the lease of $2,400 on January 1 of Year 1. • Rex expects to collect all payments from Lee. Required a. Compute the (1) annual lease payment calculated by the lessor and (2) the lease receivable to be capitalized by the lessor. Note: Round your answers to the nearest whole dollar. • Note: Do not use negative signs with your answers 1. Lease Payment: $0 2. Lease Receivable: $0 b. Provide the entries for the lessor on (1) January 1 and (2) December 31, of Year 1. Note: Round your answers to the nearest whole dollar.
Rex Corporation (lessor) and Lee Company (lessee) agreed to a lease with the following information. • Rex's carrying value of the underlying asset (inventory item) was $192,000. • Lease term is four years, beginning January 1 of Year 1. Lease payments are made each January 1, beginning at the lease commencement. • Estimated useful life of the underlying asset is four years. Estimated residual value at the end of the lease is zero. • Sales price of the underlying asset on January 1 of Year 1 is $220,800. • Rex's implicit interest rate is 8% (known to Lee). • Rex paid commission and legal fees in securing the lease of $2,400 on January 1 of Year 1. • Rex expects to collect all payments from Lee. Required a. Compute the (1) annual lease payment calculated by the lessor and (2) the lease receivable to be capitalized by the lessor. Note: Round your answers to the nearest whole dollar. • Note: Do not use negative signs with your answers 1. Lease Payment: $0 2. Lease Receivable: $0 b. Provide the entries for the lessor on (1) January 1 and (2) December 31, of Year 1. Note: Round your answers to the nearest whole dollar.
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
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 2E: Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement...
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