The following are some of the characteristics of an asset available for lease: January 1, 2019...
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The following are some of the characteristics of an asset available for lease: January 1, 2019 Inception date of lease Fair value of leased asset $100,000 15 years Useful life 5 years Lease term $13,000 Payment amount Annual Payment frequency Beginning of year Payment timing Residual value at end of lease term (unguaranteed) $50,000 7% Interest rate implicit in the lease (not known by the lessee) Lessee's incremental borrowing rate 8% December 31 Company year end Depreciation method Straight-line Assume that the lessee applies ASPE. Required: a. Evaluate whether the lessee should account for this lease as a capital lease or an operating lease. b. Prepare the lessee's journal entries for the lease for 2019 and January 1, 2020. The following are some of the characteristics of an asset available for lease: January 1, 2019 Inception date of lease Fair value of leased asset $100,000 15 years Useful life 5 years Lease term $13,000 Payment amount Annual Payment frequency Beginning of year Payment timing Residual value at end of lease term (unguaranteed) $50,000 7% Interest rate implicit in the lease (not known by the lessee) Lessee's incremental borrowing rate 8% December 31 Company year end Depreciation method Straight-line Assume that the lessee applies ASPE. Required: a. Evaluate whether the lessee should account for this lease as a capital lease or an operating lease. b. Prepare the lessee's journal entries for the lease for 2019 and January 1, 2020.
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Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
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