INTERMEDIATE ACCOUNTING (ACCT 3200B)
10th Edition
ISBN: 9781307660647
Author: SPICELAND
Publisher: MCG/CREATE
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Chapter 15, Problem 15.15BE
Guarantee d residual value
• LO15–6
On January 1, Garcia Supply 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. Negotiations led to Garcia guaranteeing a $36,000 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $35,000. What is the amount to be added to the right-of-use asset and lease liability under the residual value guarantee?
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Problem 3
On January 1, 2020, Berto Company leased a machinery with an estimated useful life of 8 years.
The contract is a six-year noncancelable lease with a 10% implicit interest rate.
PV of an annuity due of 1 at 10% for six periods
4.7908
PV of 1 at 10% for six periods
0.5645
The lease contains neither a transfer of title to the lessee nor a purchase option.
The lease requires annual payments of P500,000 beginning January 1, 2020.
The entity had a residual value guarantee of P400,000 when the machinery is returned to the lessor
upon the lease expiration.
Required:
1. Prepare a table of amortization of the lease liability and interest expense.
2. Prepare journal entries for 2020 and 2021.
3. Prepare journal entry on January 1, 2026 to record the return of the machinery to the lessor. Assume
the fair value of the asset is P450,000.
4. Prepare journal entry on January 1, 2026 to record the return of the machinery to the lessor. Assume
the fair value of the asset is P300,000.
Problem 3
On January 1, 2022, Grab Services, Inc. leased delivery trucks from Henri Industries.
The lease agreement for the P3,000,000 (fair value and present value of the lease
payments) delivery trucks specified four equal payments at the end of each year. The
useful life of the delivery trucks was expected to be 8 years with no residual value.
The implicit rate on the lease was 10%.
27. Determine the annual lease payment to be made by Grab Services?
Problem 7
Aespa Company leased equipment from Naevis Company on July 1, 2021 for eight-year period expiring
June 30, 2029.
Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was
made on July 1, 2021. The rate of interest contemplated by Aespa and Naevis is 10%.
The cash selling price of the equipment is P3,520,000 and the carrying amount is P2,800,000. The lease
Is appropriately recorded as a sales type lease.
1. What amount of Gross Income on sale should be recorded for the year?
a. 600,000
b. 720,000
c. 360,000
d. 300,000
2. What amount of interest revenue should be recorded for the year ended December 31, 2021?
a. 292,000
b. 146,000
c. 352,000
d. 176,000
Chapter 15 Solutions
INTERMEDIATE ACCOUNTING (ACCT 3200B)
Ch. 15 - Prob. 15.2QCh. 15 - Prob. 15.3QCh. 15 - Prob. 15.4QCh. 15 - A lessee should classify a lease transaction as a...Ch. 15 - Lukawitz Industries leased non-specialized...Ch. 15 - In accounting for a finance lease/sales-type...Ch. 15 - What is selling profit on a sales-type lease? How...Ch. 15 - At the beginning of an operating lease, the lessee...Ch. 15 - At the beginning of an operating lease, the lessor...Ch. 15 - In accounting for an operating lease, how are the...
Ch. 15 - Briefly describe the conceptual basis for asset...Ch. 15 - In a financing lease, front loading of lease...Ch. 15 - The discount rate influences virtually every...Ch. 15 - A lease that has a lease term (including any...Ch. 15 - A lease might specify that lease payments may be...Ch. 15 - What is a purchase option? How does it affect...Ch. 15 - A six-year lease can be renewed for two additional...Ch. 15 - Culinary Creations leased kitchen equipment under...Ch. 15 - What situations cause us to remeasure a lease...Ch. 15 - Prob. 15.21QCh. 15 - Compare the way a purchase option that is...Ch. 15 - What nonlease costs might be included as part of...Ch. 15 - The lessors initial direct costs often are...Ch. 15 - When are initial direct costs recognized in an...Ch. 15 - Prob. 15.26QCh. 15 - Prob. 15.27QCh. 15 - Prob. 15.28QCh. 15 - When a company sells an asset and simultaneously...Ch. 15 - Prob. 15.30QCh. 15 - Lease classification LO151 (Note: Brief Exercises...Ch. 15 - Lease classification LO151, LO152 Corinth Co....Ch. 15 - Lessee and lessor; calculate interest;...Ch. 15 - Finance lease; lessee; balance sheet effects ...Ch. 15 - Finance lease; lessee; income statement effects ...Ch. 15 - Sales-type lease; lessor; income statement effects...Ch. 15 - Prob. 15.7BECh. 15 - Operating lease LO154 (Note: Brief Exercises 8...Ch. 15 - Operating lease LO154 At the beginning of its...Ch. 15 - Short-term lease LO155 King Cones leased ice...Ch. 15 - Uncertain lease term LO156 Java Hut leased a...Ch. 15 - Uncertain lease payments LO156 On January 1,...Ch. 15 - Purchase option; lessor; sales-type lease LO152,...Ch. 15 - Residual value; sales-type lease LO152, LO153,...Ch. 15 - Guarantee d residual value LO156 On January 1,...Ch. 15 - Lessors initial direct costs; sales-type lease ...Ch. 15 - Lease classification LO151 Each of the four...Ch. 15 - Prob. 15.9ECh. 15 - Lessor calculation of annual lease payments;...Ch. 15 - Sales-type lease; lessor; income statement effects...Ch. 15 - Calculation of annual lease payments; residual...Ch. 15 - Lease concepts; finance/sales-type leases;...Ch. 15 - Calculation of annual lease payments; purchase...Ch. 15 - Prob. 15.37ECh. 15 - Prob. 15.38ECh. 15 - Prob. 15.39ECh. 15 - Lessors initial direct costs; operating and...Ch. 15 - Research Case 151 FASB codification; locate and...Ch. 15 - Ethics Case 153 Leasehold improvements LO153...Ch. 15 - Communication Case 155 Wheres the gain? Appendix...Ch. 15 - Prob. 15.6DMPCh. 15 - Prob. 1CCTCCh. 15 - Prob. 2CCTC
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