Sage Hill, Inc. leases a piece of equipment to Bucks Company on January 1, 2020. The contract stipulates a lease term of 5 years, with equal annual rental payments of $4,523 at the end of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. The asset has a fair value of $47,000, a book value of $42,000 and a useful life of 8 years. At the end of the lease term, Sage Hill expects the residual value of the asset to be $12,000, and this amount is guaranteed by a third party. Assuming Sage Hill wants to earn a 4% return on the lease and collectibility of the lease payments is probable, record its journal entry at the commencement of the lease on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Click here to view factor tables. Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
Sage Hill, Inc. leases a piece of equipment to Bucks Company on January 1, 2020. The contract stipulates a lease term of 5 years, with equal annual rental payments of $4,523 at the end of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. The asset has a fair value of $47,000, a book value of $42,000 and a useful life of 8 years. At the end of the lease term, Sage Hill expects the residual value of the asset to be $12,000, and this amount is guaranteed by a third party. Assuming Sage Hill wants to earn a 4% return on the lease and collectibility of the lease payments is probable, record its journal entry at the commencement of the lease on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Click here to view factor tables. Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
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 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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Your answer is partially correct.
Sage Hill, Inc. leases a piece of equipment to Bucks Company on January 1, 2020. The contract stipulates a lease term of 5 years, with equal annual rental payments of $4,523 at the end of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. The asset has a fair value of $47,000, a book value of $42,000 and a useful life of 8 years. At the end of the lease term, Sage Hill expects the residual value of the asset to be $12,000, and this amount is guaranteed by a third party.
Assuming Sage Hill wants to earn a 4% return on the lease and collectibility of the lease payments is probable, record itsjournal entry at the commencement of the lease on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)
Click here to view factor tables.
Assuming Sage Hill wants to earn a 4% return on the lease and collectibility of the lease payments is probable, record its
Click here to view factor tables.
Account Titles and Explanation
|
Debit
|
Credit
|
---|---|---|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
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