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AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

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Chapter 20, Problem 9E
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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
Problem 1GI
Problem 2GI
Problem 3GI
Problem 4GI
Problem 5GI
Problem 6GI
Problem 7GI
Problem 8GI
Problem 9GI
Problem 10GI
Problem 11GI
Problem 12GI
Problem 13GI
Problem 14GI
Problem 15GI
Problem 16GI
Problem 17GI
Problem 1MC
Problem 2MC
Problem 3MC
Problem 4MC
Problem 5MC
Problem 6MC
Problem 7MC
Problem 8MC
Problem 9MC
Problem 10MC
Problem 1RE
Problem 2RE
Problem 3RE
Problem 4RE
Problem 5RE
Problem 6RE
Problem 7RE
Problem 8RE
Problem 9RE
Problem 1E
Problem 2E
Problem 3E
Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 12P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
12 views

Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee).

Required:

  1. 1. Assuming that the lease is a sales-type lease, calculate the selling price.
  2. 2. Prepare a table summarizing the lease receipts and interest income earned by Edom.
  3. 3. Prepare journal entries for Edom tor the years 2019 and 2020.

1

To determine

Compute the selling price of the initial investment.

Explanation

Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

Sale type Lease: In a Sales-Type lease, the lessor sells the asset to the lessee and records a receivable. In this type of lease, the lessor records a dealer’s or manufacturer’s profit or loss depending upon the difference between the fair value of the asset and the carrying value of the asset.

Compute the selling price of the initial investment:

Initial Present Value of teh Investment = (PV of lease payments(selling price)

2

To determine

Prepare a table that summarizing the lease receipts and interest revenue earned by Company E for the 4 year lease term.

3

To determine

Prepare the journal entries for 2019 and 2020 for Company E.

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Ch-20 P-1GICh-20 P-2GICh-20 P-3GICh-20 P-4GICh-20 P-5GICh-20 P-6GICh-20 P-7GICh-20 P-8GICh-20 P-9GICh-20 P-10GI
Ch-20 P-11GICh-20 P-12GICh-20 P-13GICh-20 P-14GICh-20 P-15GICh-20 P-16GICh-20 P-17GICh-20 P-1MCCh-20 P-2MCCh-20 P-3MCCh-20 P-4MCCh-20 P-5MCCh-20 P-6MCCh-20 P-7MCCh-20 P-8MCCh-20 P-9MCCh-20 P-10MCCh-20 P-1RECh-20 P-2RECh-20 P-3RECh-20 P-4RECh-20 P-5RECh-20 P-6RECh-20 P-7RECh-20 P-8RECh-20 P-9RECh-20 P-1ECh-20 P-2ECh-20 P-3ECh-20 P-4ECh-20 P-5ECh-20 P-6ECh-20 P-7ECh-20 P-8ECh-20 P-9ECh-20 P-10ECh-20 P-11ECh-20 P-12ECh-20 P-13ECh-20 P-14ECh-20 P-15ECh-20 P-1PCh-20 P-2PCh-20 P-3PCh-20 P-4PCh-20 P-5PCh-20 P-6PCh-20 P-7PCh-20 P-8PCh-20 P-9PCh-20 P-10PCh-20 P-11PCh-20 P-12PCh-20 P-1CCh-20 P-2CCh-20 P-3CCh-20 P-4CCh-20 P-5CCh-20 P-6C

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