INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA
8th Edition
ISBN: 9781259767074
Author: SPICELAND
Publisher: MCG CUSTOM
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Chapter 15, Problem 15.11BE
To determine
Finance lease
Finance lease is a parallel type of direct financing whereby the owner (lessor) purchases the equipment to lease it and received the interest revenue over the period of lease for equipment, apart from the recognition of profit from sale of equipment.
To Compute: the amount of quarterly lease payments in order for M Imports to recover its normal selling price.
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54.Robbins, Inc., leased a machine from Ready Leasing Co. The lase requires 10 annual payments of P10,000 beginning immediately. The lease specifies an interest rate of 12% and a purchase option of P10,000 at the end of the tenth year, even though the machine’s estimated value on that date is P20,000. It is reasonably certain that Robbins will exercise the purchase option. Robbins’ incremental borrowing rate is 14%. What amount should Robbins record the right-of-use asset at the beginning of the lease term?
62,160
64,860
66,500
69,720
31....///
Partially correct answer icon
Your answer is partially correct.
Marin, 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 $7,367 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 $40,000, a book value of $38,000, and a useful life of 8 years. At the end of the lease term, Marin expects the residual value of the asset to be $12,000, and this amount is guaranteed by a third party. Marin wants to earn a 6% return on the lease and collectibility of the lease payments is probable. Assume that the lease receivable is $40,000, deferred gross profit is $2,000, and the rate of return to amortize the net lease receivable to zero is 7.64%.Prepare Marin’ journal entry at the end of the first year of the lease to record the receipt of…
Exercise 15-33 (Algo) Nonlease payments; lessor and lessee [LO15-2, 15-7]
On January 1, 2024, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 11% rate of return for providing long-term financing. The lease agreement specified the following:
Ten annual payments of $61,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through 2032.
The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $346,464.
The lease qualifies as a finance lease/sales-type lease.
A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $8,000 per year are specified, beginning January 1, 2024. NRC was to pay this cost as incurred, but lease payments reflect this expenditure.
A partial amortization schedule, appropriate for both the lessee and lessor, follows:
Note: Use…
Chapter 15 Solutions
INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA
Ch. 15 - Prob. 15.1QCh. 15 - Prob. 15.2QCh. 15 - Prob. 15.3QCh. 15 - Q 15–4
Former IASB chairman David Tweedie has...Ch. 15 - Prob. 15.5QCh. 15 - Prob. 15.6QCh. 15 - Lukawitz Industries leased non-specialized...Ch. 15 - Prob. 15.8QCh. 15 - Prob. 15.9QCh. 15 - Q 15–10 What are executory costs? How are they...
Ch. 15 - The discount rate influences virtually every...Ch. 15 - A lease might specify that lease payments may be...Ch. 15 - The lessors initial direct costs often are...Ch. 15 - When are initial direct costs recognized in an...Ch. 15 - Q 15–15 What are the required lease disclosures...Ch. 15 - Prob. 15.16QCh. 15 - Prob. 15.17QCh. 15 - Prob. 15.18QCh. 15 - Prob. 15.19QCh. 15 - Prob. 15.20QCh. 15 - Prob. 15.21QCh. 15 - Prob. 15.22QCh. 15 - Prob. 15.23QCh. 15 - Operating lease LO154 (Note: Brief Exercises 8...Ch. 15 - Operating lease LO154 At the beginning of its...Ch. 15 - Prob. 15.3BECh. 15 - Prob. 15.4BECh. 15 - Prob. 15.5BECh. 15 - Prob. 15.6BECh. 15 - Prob. 15.7BECh. 15 - Finance lease; lessee; balance sheet effects ...Ch. 15 - Prob. 15.9BECh. 15 - Prob. 15.10BECh. 15 - Prob. 15.11BECh. 15 - Purchase option; lessor; sales-type lease LO152,...Ch. 15 - Prob. 15.13BECh. 15 - Prob. 15.14BECh. 15 - Prob. 15.1ECh. 15 - Prob. 15.2ECh. 15 - Prob. 15.3ECh. 15 - Prob. 15.4ECh. 15 - Prob. 15.5ECh. 15 - Prob. 15.6ECh. 15 - Prob. 15.7ECh. 15 - Prob. 15.8ECh. 15 - Prob. 15.9ECh. 15 - Prob. 15.10ECh. 15 - Prob. 15.11ECh. 15 - Prob. 15.12ECh. 15 - Prob. 15.13ECh. 15 - Prob. 15.14ECh. 15 - Prob. 15.15ECh. 15 - Prob. 15.16ECh. 15 - Prob. 15.17ECh. 15 - Prob. 15.18ECh. 15 - Prob. 15.19ECh. 15 - Prob. 15.22ECh. 15 - Prob. 15.23ECh. 15 - Prob. 15.24ECh. 15 - Prob. 15.25ECh. 15 - Prob. 15.26ECh. 15 - Prob. 15.27ECh. 15 - Prob. 15.28ECh. 15 - Prob. 15.29ECh. 15 - Prob. 15.30ECh. 15 - Prob. 15.31ECh. 15 - Prob. 15.32ECh. 15 - Prob. 1CPACh. 15 - Prob. 2CPACh. 15 - Prob. 3CPACh. 15 - Prob. 4CPACh. 15 - Prob. 5CPACh. 15 - Prob. 6CPACh. 15 - Prob. 7CPACh. 15 - Prob. 8CPACh. 15 - Prob. 9CPACh. 15 - Prob. 10CPACh. 15 - Prob. 11CPACh. 15 - Prob. 1CMACh. 15 - Prob. 2CMACh. 15 - Prob. 3CMACh. 15 - Prob. 15.1PCh. 15 - Prob. 15.2PCh. 15 - Prob. 15.3PCh. 15 - Prob. 15.4PCh. 15 - Prob. 15.5PCh. 15 - Prob. 15.6PCh. 15 - Prob. 15.7PCh. 15 - Prob. 15.8PCh. 15 - Prob. 15.9PCh. 15 - Prob. 15.10PCh. 15 - P 15–11
Operating lease to lessee—capital lease to...Ch. 15 - Prob. 15.12PCh. 15 - Prob. 15.13PCh. 15 - Prob. 15.14PCh. 15 - Prob. 15.15PCh. 15 - Prob. 15.16PCh. 15 - P 15–17
Integrating problem; bonds; note;...Ch. 15 - Prob. 15.18PCh. 15 - Prob. 15.19PCh. 15 - Prob. 15.20PCh. 15 - Prob. 15.21PCh. 15 - Prob. 15.22PCh. 15 - Research Case 151 FASB codification; locate and...Ch. 15 - Ethics Case 153 Leasehold improvements LO153...Ch. 15 - Prob. 15.5BYPCh. 15 - Prob. 15.6BYPCh. 15 - Prob. 15.7BYPCh. 15 - Prob. 15.9BYPCh. 15 - Prob. 15.1AFKC
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