What is the formula for this problem? Six ovens were rented on Dec 31, with $20,000 charged to rent expense. The lease runs for 6 years with an implicit interest rate 5%. At the end of the 6 years, Peyton will own them.

What is the formula for this problem? Six ovens were rented on Dec 31, with $20,000 charged to rent expense. The lease runs for 6 years with an implicit interest rate 5%. At the end of the 6 years, Peyton will own them.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 53BE: Unearned Rent Revenue Mannion Property Management leases commercial properties and expects its...

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Leases for six ovens were rented on Dec 31 with 20,000 charged to rent expense the lease runs for six years with an implicit interest rate of 5% at the end pf the 6 years the company will own them what are the necessary adjusting entries?
On January 1, Porter Moving and Storage leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $30,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. If Porter’s revenues exceed a specified amount during the lease term, Porter will pay an additional $12,000 lease payment at the end of the lease. Porter estimates a 60% probability of meeting the target revenue amount. What amount, if any, should be added to the right-of-use asset and lease payable under the contingent rent agreement?
On January 1, 2016, Sweetwater Furniture Company leased office space under a 21-year operating lease agreement. The contract calls for annual rent payments on December 31 of each year. The payments are $10,000 the first year and increase by $500 per year. Benefits expected from using the office space are expected to remain constant over the lease term. Required: Record Sweetwater’s rent payment at December 31, 2020 (the fifth rent payment) and December 31, 2030 (the 15th rent payment).
On January 1, Espinoza Moving and Storage leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. If Espinoza’s revenues exceed a specified amount during the lease term, Espinoza will pay an additional $4,000 lease payment at the end of the lease. Espinoza estimates a 60% probability of meeting the target revenue amount. What amount should be added to the right-of-use asset and lease liability under the contingent rent agreement?