a
Concept Introduction:
Operating lease: Operating lease is a contract in which the owner retains the risk and rewards of ownership, a lessee under an operating lease only reports lease payments as an expense and does not report leased asset or lease liability in the
The
b
Concept Introduction:
Operating lease: Operating lease is a contract in which the owner retains the risk and rewards of ownership, a lessee under an operating lease only reports lease payments as an expense and does not report leased asset or lease liability in the balance sheet whereas financial leases in which lessor transfers all risk and reward of ownership to the lessee.
The journal entry for the first-year lease payment.
c
Concept Introduction:
Operating lease: Operating lease is a contract in which the owner retains the risk and rewards of ownership, a lessee under an operating lease only reports lease payments as an expense and does not report leased asset or lease liability in the balance sheet whereas financial leases in which lessor transfers all risk and reward of ownership to the lessee.
The journal entry to record straight-line amortization for three years.
d
Concept Introduction:
Operating lease: Operating lease is a contract in which the owner retains the risk and rewards of ownership, a lessee under an operating lease only reports lease payments as an expense and does not report leased asset or lease liability in the balance sheet whereas financial leases in which lessor transfers all risk and reward of ownership to the lessee.
The journal entry for lease payments at the end of years 1 and 2
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FINANCIAL & MANAG ACCT (CH. 1 - 24 EBOOK
- Use the information in RE20-1. Prepare the journal entry that Keller Corporation would make during the first year of the lease assuming that the lease is classified as an operating lease.arrow_forwardUse the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.arrow_forwardUse the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).arrow_forward
- Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease of equipment entered into on March 1, 2019. The lease is classified as a sales-type lease by the lessor (Anson Company) and as a finance lease by the lessee (Bullard Company). Assume that the lease payments are nude at the beginning of each month, interest and straight-line depreciation are recognized at the end of each month, and the residual value of the leased asset is zero at the end of a 3-year life. Required: 1. Record the lease (including the initial receipt of 2,000) and the receipt of the second and third installments of 2,000 in Ansons accounts. Carry computations to the nearest dollar. 2. Record the lease (including the initial payment of 2,000), the payment of the second and third installments of 2,000, and monthly depreciation in Bullards accounts. The lessee records the lease obligation at net present value. Carry computations to the nearest dollar.arrow_forwardOn December 31, 2019, Skysong Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Skysong to make annual payments of $8,162 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,100 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Skysong uses the straight-line method of depreciation for all of its plant assets. Skysong's incremental borrowing rate is 9%, and the lessor's implicit rate is unknown. Click here to view factor tables. What type of lease is this? This is a/an lease. eTextbook and Media List of Accounts Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Present value of the lease payments eTextbook and Media List of Accountsarrow_forwardRecording Operating Lease Journal Entries-Lessee Lessor Co. enters into an operating lease of property with Lessee Co. on January 1 for a five-year term at an annual fixed lease payment of $10,000 (with beginning of year payments). Prepare the journal entries for the lessee assuming that the lessee is aware of the rate implicit in the lease of 5%. a. January 1-Record the right-of-use asset. b. January 1-Record the first lease payment. c. December 31-Record the year-end adjusting entry. • Note: Round your answers to the nearest whole dollar. Date a) Jan. 1 b) Jan. 1 c) Dec. 31 Check Account Name Right-of-Use Asset To record the right-of-use asset To record the first lease payment To record the year-end adjusting entry. Dr. 45,463 0 0 0 0 O O Cr. 0x 0x 0x 0x 0x 0x 0xarrow_forward
- See attached picture Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31 and reversing entries are used when appropriatearrow_forwardSee attached picture 1. Prepare a 10-year lease amortization schedule 2. Prepare all of the lessor's journal entries for the first yeararrow_forwardPrepare an amortization table for the five-year term of the lease. Prepare journal entries in the books of Generous, Inc. for years 2022 and 2023 to record all transactions relating to the lease. Prepare the journal entry at the end of the lease term to record the transfer of the leased automobiles to the lessor.arrow_forward
- Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% a. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability b. What amount will be added to the balance sheet as an asset? Amount added as an asset The rest of the questions are given in pictures below. please answer all parts correctly. i will upvote. thank you!!arrow_forwardA lease agreement that qualifies as a finance lease calls for annual lease payments of $25,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 5%. Required: a. Determine the present value of the lease upon the lease's inception. b. Create a partial amortization table through the second payment on January 1, Year 2. c. If the lessee's fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its income statement for the first year ended December 31 (ignore taxes)? Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C If the lessee's fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its…arrow_forwardA lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over a six-year lease term (also the asset’s useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 5%. Required: Determine the present value of the lease upon the lease's inception. Create a partial amortization table through the second payment on January 1, Year 2. If the lessee’s fiscal year is the calendar year, what would be the amounts related to the lease that the lessee would report in its income statement for the first year ended December 31 (ignore taxes)?arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning