Blossom Corporation enters into an agreement with Yates Rentals Co. on January 1, 2021 for the purpose of leasing a machine to be used in its manufacturing operations. The following data pertain to the agreement: (a) The term of the noncancelable lease is 3 years with no renewal option. Payments of $338317 are due on January 1 of each year. (b) The fair value of the machine on January 1, 2021, is $950000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. (c) Blossom depreciates all machinery it owns on a straight-line basis. (d) Blossom's incremental borrowing rate is 9% per year. Blossom does not have knowledge of the 7% implicit rate used by Yates. If Yates records this lease as a direct-financing lease, what amount would be recorded as Lease Receivable at the inception of the lease? $338317

Blossom Corporation enters into an agreement with Yates Rentals Co. on January 1, 2021 for the purpose of leasing a machine to be used in its manufacturing operations. The following data pertain to the agreement: (a) The term of the noncancelable lease is 3 years with no renewal option. Payments of $338317 are due on January 1 of each year. (b) The fair value of the machine on January 1, 2021, is $950000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. (c) Blossom depreciates all machinery it owns on a straight-line basis. (d) Blossom's incremental borrowing rate is 9% per year. Blossom does not have knowledge of the 7% implicit rate used by Yates. If Yates records this lease as a direct-financing lease, what amount would be recorded as Lease Receivable at the inception of the lease? $338317

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...

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