In this simulation, you are asked to address questions related to the accounting for leases. Prepare responses
Question:
In this simulation, you are asked to address questions related to the accounting for leases. Prepare responses to all parts. (Round amounts to the nearestcent.)
KWW Professional Simulation Time Remaining 1 hour 40 minutes Accounting for Leases Unsplit Spit Horiz Spit Vertical Spreadsheet Cakulator Exit Situation Explanation Mossurement Jourmal Entry Directions Resources On January 1, 2012, Dexter Labs, Inc. signed a 5-year noncancelable lease for a machine. The terms of the lease called for Dexter to make annual payments of $8,668 at the beginning of each year, starting January 1, 2012. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Dexter uses the straight-line method of depreciation for all of its plant assets. Dexter's incremental borrowing rate is 10%, and the lessor's implicit rate is unknown. Directions Situation Explanation Measurement Journal Entry Resources What type of lease is this? Explain. Situation Explanation Messurement Journal Entry Directions Resources Compute the present value of the minimum lease payments. Situation Explanation Measurement Journal Entry Directions Resources Prepare all necessary journal entries for Dexter Labs, Inc. for this lease through January 1, 2013.
Step by Step Answer:
Explanation This is a capital lease to Dexter Labs since the lease ter...View the full answer
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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