[Section 3 general information stays the same. It is repeated for your information. Section 2 and Section 3 are based on the same set of information.] Bentley Inc. (the lessor) leases an asset to Haley Corp. (the lessee) for four years. Data relating to this lease are provided below. Assume this lease is a capital lease in all parts below. Answer the following questions for Bentley Inc. (the Lessor). 1. Lease is signed on 1/1/1 2. Lease term: 4 years 3. Remaining useful life of leased asset as of 1/1/1: 5 years 4. Cost of leased asset to lessor (less than FMV of leased asset): $35,000 5. Expected fair market value of leased asset on 12/31/4: $1,000 6. Expected fair market value of leased asset on 12/31/5: $6,000 7. Incremental borrowing rate and rate implicit in lease: 10% 8. Actual fair market value of leased asset on 12/31/4: $8,000 9. Actual fair market value of leased asset on 12/31/5: $5,000 10. Payments of $20,000 are to be made at the end of each year. Executory costs represent $2,000 of the $20,000 payment. 11. The lease contains a guaranteed residual value on 12/31/4 of $4,000. Prepare the journal entries at the termination of the lease on 12/31/4. Debit to for Credit to for Use one of the following account names. Please make sure you type in the account name with the exact name shown below. Asset, Accumulated Depreciation - Leased Asset, Cash, COGS, Gain, Leased Asset, Lease Obligation, Lease Receivable, Loss, Sales
[Section 3 general information stays the same. It is repeated for your information. Section 2 and Section 3 are based on the same set of information.] Bentley Inc. (the lessor) leases an asset to Haley Corp. (the lessee) for four years. Data relating to this lease are provided below. Assume this lease is a capital lease in all parts below. Answer the following questions for Bentley Inc. (the Lessor). 1. Lease is signed on 1/1/1 2. Lease term: 4 years 3. Remaining useful life of leased asset as of 1/1/1: 5 years 4. Cost of leased asset to lessor (less than FMV of leased asset): $35,000 5. Expected fair market value of leased asset on 12/31/4: $1,000 6. Expected fair market value of leased asset on 12/31/5: $6,000 7. Incremental borrowing rate and rate implicit in lease: 10% 8. Actual fair market value of leased asset on 12/31/4: $8,000 9. Actual fair market value of leased asset on 12/31/5: $5,000 10. Payments of $20,000 are to be made at the end of each year. Executory costs represent $2,000 of the $20,000 payment. 11. The lease contains a guaranteed residual value on 12/31/4 of $4,000. Prepare the journal entries at the termination of the lease on 12/31/4. Debit to for Credit to for Use one of the following account names. Please make sure you type in the account name with the exact name shown below. Asset, Accumulated Depreciation - Leased Asset, Cash, COGS, Gain, Leased Asset, Lease Obligation, Lease Receivable, Loss, Sales
Accounting
27th Edition
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Chapter11: Current Liabilities And Payroll
Section: Chapter Questions
Problem 11.7CP
Related questions
Question
![Section 3 Q3
[Section 3 general information stays the same. It is repeated for your information. Section 2 and Section 3 are based on the same set of information.]
Bentley Inc. (the lessor) leases an asset to Haley Corp. (the lessee) for four years. Data relating to this lease are provided below. Assume this lease is a capital lease in
all parts below. Answer the following questions for Bentley Inc. (the Lessor).
1. Lease is signed on 1/1/1
2. Lease term: 4 years
3. Remaining useful life of leased asset as of 1/1/1: 5 years
4. Cost of leased asset to lessor (less than FMV of leased asset): $35,000
5. Expected fair market value of leased asset on 12/31/4: $1,000
6. Expected fair market value of leased asset on 12/31/5: $6,000
7. Incremental borrowing rate and rate implicit in lease: 10%
8. Actual fair market value of leased asset on 12/31/4: $8,000
9. Actual fair market value of leased asset on 12/31/5: $5,000
10. Payments of $20,000 are to be made at the end of each year. Executory costs represent $2,000 of the $20,000 payment.
11. The lease contains a guaranteed residual value on 12/31/4 of $4,000.
Prepare the journal entries at the termination of the lease on 12/31/4.
Debit to
for
Credit to
for
Use one of the following account names. Please make sure you type in the account name with the exact name shown below.
Asset, Accumulated Depreciation - Leased Asset, Cash, COGS, Gain, Leased Asset, Lease Obligation, Lease Receivable, Loss, Sales](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c44c7e3-b296-4c2a-b992-9d257cbb4b4e%2Fe4ecf219-2f77-4c00-83f9-4380f6a97d40%2Fcm7dzys_processed.png&w=3840&q=75)
Transcribed Image Text:Section 3 Q3
[Section 3 general information stays the same. It is repeated for your information. Section 2 and Section 3 are based on the same set of information.]
Bentley Inc. (the lessor) leases an asset to Haley Corp. (the lessee) for four years. Data relating to this lease are provided below. Assume this lease is a capital lease in
all parts below. Answer the following questions for Bentley Inc. (the Lessor).
1. Lease is signed on 1/1/1
2. Lease term: 4 years
3. Remaining useful life of leased asset as of 1/1/1: 5 years
4. Cost of leased asset to lessor (less than FMV of leased asset): $35,000
5. Expected fair market value of leased asset on 12/31/4: $1,000
6. Expected fair market value of leased asset on 12/31/5: $6,000
7. Incremental borrowing rate and rate implicit in lease: 10%
8. Actual fair market value of leased asset on 12/31/4: $8,000
9. Actual fair market value of leased asset on 12/31/5: $5,000
10. Payments of $20,000 are to be made at the end of each year. Executory costs represent $2,000 of the $20,000 payment.
11. The lease contains a guaranteed residual value on 12/31/4 of $4,000.
Prepare the journal entries at the termination of the lease on 12/31/4.
Debit to
for
Credit to
for
Use one of the following account names. Please make sure you type in the account name with the exact name shown below.
Asset, Accumulated Depreciation - Leased Asset, Cash, COGS, Gain, Leased Asset, Lease Obligation, Lease Receivable, Loss, Sales
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