Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Accumulated depreciation (Bal. Sht) Cash (Bal. Sht) Deferred rent revenue (Bal. Sht) Equipment (Bal. Sht) Lease payable (Bal. Sht) Lease receivable (Bal. Sht) Note payable
Accumulated depreciation (Bal. Sht)
Cash (Bal. Sht)
Deferred rent revenue (Bal. Sht)
Equipment (Bal. Sht)
Lease payable (Bal. Sht)
Lease receivable (Bal. Sht)
Note payable (Bal. Sht)
Prepaid service contract (Bal. Sht)
Right-of-Use asset (Bal. Sht)
Warehouse (Bal. Sht)
Amortization expense (Inc. Stmt)
Cost of goods sold (Inc. Stmt)
Gain on sale of warehouse (Inc. Stmt)
Interest expense (Inc. Stmt)
Interest revenue (Inc. Stmt)
Lease expense (Inc. Stmt)
Lease revenue (Inc. Stmt)
Misc. expenses (Inc. Stmt)
Rent revenue (Inc. Stmt)
Sales revenue (Inc. Stmt)
Problem 3. Following are the terms of a lease entered into on January 1, 2020. [LC] FMV of asset at inception oflease $500,000.00 Estimated residual value of asset at lease temination $80,000.00 Portion of residual value guaranteed by Lessee $50,000.00 Lessor's amortized cost of asset at inception of lease $500,000.00 Duration oflease 2 yrs Lease payment amount $230,458.00 Frequency of payments annually First payment due at inception of lease? Yes Purchase option that Lessee is reasonably certain to exercise? No Title transfers to Lessee at any time during or at end of lease? No Lessor's implicit rate 12% Lessee's incremental borrowing rate 12% Does Lessee know Lessor's implicit rate? yes Remaining economic life of asset 5 yrs Economic life of asset when new 5 yrs Specialized use asset with no alternative use to Lessor at end of lease? no Nonlease components included in lease payment? Initial direct costs incurred by Lessor (assume recorded by Lessor in Misc. Expenses when incurred) Initial direct costs incurred by Lessee (assume recorded by Lessor in Misc. Expenses when incurred) Lessor's fiscal year end 12/31 Lessee's fiscal year end 12/31 no none none Required 1. For the following lease prepare amortization schedule and lease-related entries booked by Lessor and Lessee over the entire lease tem. Lessee amortization schedule: date pmt interest principal balance 1/1/2020 1/1/2020 12/31/2020 $230,458 $230,458 Lessor amortization schedule date interest principal balance pmt 1/1/2020 1/1/2020 $230,458.00 12/31/2020 $230,458.00 12/31/2021 Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amou Entries by Lessee at inception of lease on 1/1/2020: Account Debit Credit 1 1 1 1 Entries by Lessor at inception of lease on 1/1/2020: Account Debit Credit N N N N Entries by Lessee at 12/31/2020: Account Debit Credit 3 3 Entries by Lessor at 12/31/2020: Account Debit Credit 4 4 4 Entries by Lessor at 12/31/2021: Account Debit Credit 5 5 5 5 Entries by Lessee at 12/31/2021: Account Debit Credit 6 6 2. Redo Lessor's entry to book the lease on January 1, 2020 assuming that the Lessor's amortized cost of the asset is $400,000. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the am Entries by Lessor at inception of lease on 1/1/2020: Account Debit Credit 7 7 7 7 Problem 3. Following are the terms of a lease entered into on January 1, 2020. [LC] FMV of asset at inception oflease $500,000.00 Estimated residual value of asset at lease temination $80,000.00 Portion of residual value guaranteed by Lessee $50,000.00 Lessor's amortized cost of asset at inception of lease $500,000.00 Duration oflease 2 yrs Lease payment amount $230,458.00 Frequency of payments annually First payment due at inception of lease? Yes Purchase option that Lessee is reasonably certain to exercise? No Title transfers to Lessee at any time during or at end of lease? No Lessor's implicit rate 12% Lessee's incremental borrowing rate 12% Does Lessee know Lessor's implicit rate? yes Remaining economic life of asset 5 yrs Economic life of asset when new 5 yrs Specialized use asset with no alternative use to Lessor at end of lease? no Nonlease components included in lease payment? Initial direct costs incurred by Lessor (assume recorded by Lessor in Misc. Expenses when incurred) Initial direct costs incurred by Lessee (assume recorded by Lessor in Misc. Expenses when incurred) Lessor's fiscal year end 12/31 Lessee's fiscal year end 12/31 no none none Required 1. For the following lease prepare amortization schedule and lease-related entries booked by Lessor and Lessee over the entire lease tem. Lessee amortization schedule: date pmt interest principal balance 1/1/2020 1/1/2020 12/31/2020 $230,458 $230,458 Lessor amortization schedule date interest principal balance pmt 1/1/2020 1/1/2020 $230,458.00 12/31/2020 $230,458.00 12/31/2021 Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amou Entries by Lessee at inception of lease on 1/1/2020: Account Debit Credit 1 1 1 1 Entries by Lessor at inception of lease on 1/1/2020: Account Debit Credit N N N N Entries by Lessee at 12/31/2020: Account Debit Credit 3 3 Entries by Lessor at 12/31/2020: Account Debit Credit 4 4 4 Entries by Lessor at 12/31/2021: Account Debit Credit 5 5 5 5 Entries by Lessee at 12/31/2021: Account Debit Credit 6 6 2. Redo Lessor's entry to book the lease on January 1, 2020 assuming that the Lessor's amortized cost of the asset is $400,000. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the am Entries by Lessor at inception of lease on 1/1/2020: Account Debit Credit 7 7 7 7Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started