Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1 2 On January 1, 2020, Orlole Company leased equipment to Flym Corporation. The following information pertains to this lease. The term of the non-cancelable

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
1 2 On January 1, 2020, Orlole Company leased equipment to Flym Corporation. The following information pertains to this lease. The term of the non-cancelable lease s 6 years. At the end of the lease term. Flynn has the option to purchase the equipment for $2.000, while the expected residual value at the end of the lewe is 59,000. Equatrental payments are due on January 1 of each year, beginning in 2020 The fair value of the equipment on January 1, 2020, is $185.000, and its cost is $120.000, The equipment has an economic life of years. Flynn depreciates all of its equipment on a straight-line basis Oriole set the annual rental to ensure a o'k rate of return. Flynn's incrementat borrowing rate is 8%, and the implicit rate of the lessor is unknown Collectibility of lease payments by the lessor is probable 2 4 5 Both the lessor and the lessee's accounting periods end on December 31, th Calculate the amount of the annual rental payment. (Round answer to 0 decimal places, eg. 5,275.) Annual rental payment $ e Textbook and Media List of Accounts Prepare all the necessary journal entries for Oriole for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, eg. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit (To record the lease) (To record lease payment) + Chapter 21(b) Homewor Question 1 of 2 -12 (To record lease payment) eTextbook and Media List of Accounts Suppose the collectibility of the lease payments was not probable for Oriole. Prepare the necessary journal entry for the company in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually) Date Account Titles and Explanation Debit 1/1/20 e Textbook and Media List of Accounts Prepare all the necessary journal entries for Flynn for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, s 5,275. Record journal entries in the order presented in the problem Prepare all the necessary journal entries for Flynn for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit (To record the lease) (To record the lease payment) (To record amortization of the right-of-use asset) (To record interest expense) Prepare the effect on the journal entry for Flynn at lease commencement, assuming initial direct costs of $2,000 are incurred by Flynn to negotiate the lease. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit e Textbook and Media

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

World Class Internal Audit Tales From My Journey

Authors: Norman Marks

1st Edition

1500791962, 978-1500791964

More Books

Students also viewed these Accounting questions