Asap ans Sule Zero, Inc., an equipment manufacturer, leases a freezer toCommercialKitchen Compary on January , 2019. The iease is for a b-year period Ondrequiresequai annual payments of $41,06L33 at the beginning of each year.The first payment is received on January , 1019. Suo Zero manufacturedthefreezer during 1ate 2018 and kas carried it in finished opods inventory ata cost of$61,500. Collectalbility of lease payments is reasonaby predictabie, and nowmportant uncertainties surround the ameunt of costs yet to be incurredby SuleZero.Sưc Zero set the annual rental to ensure an 8% rate of returm. Thefreezer has aneconowic life of 8 years with no residual vatue and reverts back to SubZero at thetermination of the lease.Required.can Compute the amount of lease receivaloie, round to the nearest wholedollar.Clo) Prepare an vecessary journal entries on Sulb Zeros books for 2019 and2010;again, round to the rearest whole dollar.

Journal entry shows the recording of transactions during an accounting year and every transaction…

Sưe Zero, Inc, an equipment manufacturer, leased a freezer to Commercial Kitchen Company on January , 2019. The lease is for a b-year period and requives equai annual payments of $41,061.33 at the beginning of each year. The first payment is veceived on January , 2019. Suo Zero manufactured the freezer during 1ate 2018 and has carried it in finished goods inventory at a cost of $61,500. Collectalility of lease payments is reasonably predictalbe, and no important uncertainties surround the ameunt of costs yet to be incurred by Sue Zero. Sưe Zero set the annual vental to ensure an 8% vate of retum. The freezer has an economic life of 8 years with no residuai value and reverts back to Sub Zero at the termination of the lease. Required. can Compute the amount of lease receivaloie, round to the nearest whole dollar. Clo) Prepare an necessary journal entries on Sub 2eros books for 1019 andi 2O10, dgdin, round to the rearest whole dollar.

Sưe Zero, Inc, an equipment manufacturer, leased a freezer to Commercial Kitchen Company on January , 2019. The lease is for a b-year period and requives equai annual payments of $41,061.33 at the beginning of each year. The first payment is veceived on January , 2019. Suo Zero manufactured the freezer during 1ate 2018 and has carried it in finished goods inventory at a cost of $61,500. Collectalility of lease payments is reasonably predictalbe, and no important uncertainties surround the ameunt of costs yet to be incurred by Sue Zero. Sưe Zero set the annual vental to ensure an 8% vate of retum. The freezer has an economic life of 8 years with no residuai value and reverts back to Sub Zero at the termination of the lease. Required. can Compute the amount of lease receivaloie, round to the nearest whole dollar. Clo) Prepare an necessary journal entries on Sub 2eros books for 1019 andi 2O10, dgdin, round to the rearest 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

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 24E: Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January...

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On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
JustKitchens Inc. provides services to restaurants and hotels. The company supplies paper products, tableware, cookware, restaurant and kitchen equipment, and cleaning supplies. On January 2, 2019, Just-Kitchens enters into a contract with a local restaurant chain to provide its services for 3 years at a cost of 10,000 per year. The restaurant chain pays the total contract fee on January 2, 2019. JustKitchenss stand-alone selling price is also 10,000 per year. After 2 years, the restaurant asks to modify the contract. On January 2, 2021, the companies agree to reduce the fee for the third year to 9,000 in exchange for extending the contract for 2 additional years at a fee of 11,000 per year. This modification is agreed to by both parties, and on that date the restaurant chain pays for the additional 2 years of service. The 11,000 fee for the additional years is the same as JustKitchenss stand-alone price. Required: 1. How should JustKitchens account for the contract modification? 2. Prepare the journal entry that JustKitchens would make over the life of the contract.
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, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.
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