Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bramble Corporation leased equipment to Marin, Inc on January 1, 2020. The lease agreement called for annual rental payments of $1.236 at the beginning of

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Bramble Corporation leased equipment to Marin, Inc on January 1, 2020. The lease agreement called for annual rental payments of $1.236 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $10,100, a book value of $8, 100, and Bramble expects a residual value of $7,600 at the end of the lease term. Bramble set the lease payments with the intent of earning a 5% return, though Marin is unaware of the rate implicit in the lease and has an incremental borrowing rate of 7%. There is no bargain purchase option ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature Click here to view factor tables (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Determine the nature of the lease to both Bramble and Marin The lease is alan lease to Marin The lease is alan lease to Bramble (b) Prepare all necessary journal entries for Marin in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places es. 5.275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) To record lease payment) lo How would the measurement of the lease liability and right-of-use asset be affected it, as a result of the lease contract, Marin was also required to pay $500 in commissions, prepay $700 in addition to the first rental payment, and pay $150 of insurance each year? (Round answers to decimal places, eg. 5,275.) Lease liability $ Right-of-use-asset S (d) Suppose, instead of a 3-year lease term. Marin and Bramble agree to a one-year lease with a payment of $1.236 at the start of the Tease. Prepare necessary journal entry for Marin in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 1/1/20

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

Fundamentals Of Accounting Course 2

Authors: Claudia B. Gilbertson

9th Edition

053844827X, 9780538448277

More Books

Students also viewed these Accounting questions