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Branif Leasing leases mechanical equipment to industrial consumers under sales - type leases that earn Branif a 9 % rate of return for providing long
Branif Leasing leases mechanical equipment to industrial consumers under salestype leases that earn Branif a rate of return for providing longterm financing. A lease agreement with Branson Construction specified annual payments beginning December the beginning of the lease. Branif Leasing leases mechanical equipment to industrial consumers under salestype leases that earn Branif a
rate of return for providing longterm financing. A lease agreement with Branson Construction specified annual
payments beginning December the beginning of the lease.
The estimated useful life of the leased equipment is years with no residual value.
Its cost to Branif was $
The lease qualifies as a finance lease to Branson.
Maintenance of the equipment was contracted for through a year service agreement with Midway Service
Company requiring annual payments of $ beginning December
Progressive insurance Company charges Branif $ annually for hazard insurance coverage on the
equipment.
Both companies use straightline depreciation or amortization.
Note: Use tables, Excel, or a financlal caleulator. FV of $ PV of $ FVA of $ PVA of $ FVAD of $ and PVAD of $
Required:
Prepare the appropriate entries for both the lessee and lessor to record the second lease payment and depreciation
on December under each of three independent assumptions:
The lessee pays maintenance costs as incurred. The lessor pays insurance premiums as incurred. The lease
agreement requires annual payments of $
The contract specifies that the lessor pays maintenance costs as incurred. The lessee's lease payments were
increased to $ to include an amount sufficient to reimburse these costs.
The lessee's lease payments of $ included $ for hazard insurance on the equipment rather than
maintenance.
The estimated useful life of the leased equipment is years with no residual value.
Its cost to Branif was $
The lease qualifies as a finance lease to Branson.
Maintenance of the equipment was contracted for through a year service agreement with Midway Service Company requiring annual payments of $ beginning December
Progressive insurance Company charges Branif $ annually for hazard insurance coverage on the equipment.
Both companies use straightline depreciation or amortization.
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $ PVA of $ FVAD of $ and PVAD of $
Required:
Prepare the appropriate entries for both the lessee and lessor to record the second lease payment and depreciation on December under each of three independent assumptions:
The lessee pays maintenance costs as incurred. The lessor pays insurance premiums as incurred. The lease agreement requires annual payments of $
The contract specifies that the lessor pays maintenance costs as incurred. The lessees lease payments were increased to $ to include an amount sufficient to reimburse these costs.
The lessees lease payments of $ included $ for hazard insurance on the equipment rather than maintenance.
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