Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cullumber Incorporated leases a piece of machinery to Bramble Company on January 1, 2020, under the following terms. 1. The lease is to be for

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Cullumber Incorporated leases a piece of machinery to Bramble Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $12,209 to be made at the beginning of each year. 2. The machinery' has a fair value of $64,752, a book value of $48,320, and an economic life of 10 years. At the end of the lease term, both parties expect the machinery to have a residual value of $24,160. To protect against a large loss, Cullumber 3. requests Bramble to guarantee $16,870 of the residual value, which Irving agrees to do. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. 5. The implicit rate is 5%, which is known by Bramble. 6. Collectibility of the payments is probable. 4. Click here to view factor tables. Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a , and for the lessor, it is a eTextbook and Media List of Accounts Prepare the journal entries for Bramble for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) eTextbook and Media List of Accounts Prepare the journal entries for Cullumber for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To record first lease payment) Dec. 31 (To record lease revenue) e Textbook and Media List of Accounts Evaluate the criteria for classification of the lease, and describe the nature of the lease, assuming that Bramble did not guarantee any amount of the expected residual value. For the lessee, it is a and for the lessor, it is a e Textbook and Media List of Accounts Suppose Bramble did not guarantee any amount of the expected residual value. Prepare the journal entries for Cullumber for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease payments) Dec. 31 (To record lease revenue) Dec. 31 (To record depreciation) e Textbook and Media List of Accounts Cullumber Incorporated leases a piece of machinery to Bramble Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $12,209 to be made at the beginning of each year. 2. The machinery' has a fair value of $64,752, a book value of $48,320, and an economic life of 10 years. At the end of the lease term, both parties expect the machinery to have a residual value of $24,160. To protect against a large loss, Cullumber 3. requests Bramble to guarantee $16,870 of the residual value, which Irving agrees to do. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. 5. The implicit rate is 5%, which is known by Bramble. 6. Collectibility of the payments is probable. 4. Click here to view factor tables. Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a , and for the lessor, it is a eTextbook and Media List of Accounts Prepare the journal entries for Bramble for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) eTextbook and Media List of Accounts Prepare the journal entries for Cullumber for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To record first lease payment) Dec. 31 (To record lease revenue) e Textbook and Media List of Accounts Evaluate the criteria for classification of the lease, and describe the nature of the lease, assuming that Bramble did not guarantee any amount of the expected residual value. For the lessee, it is a and for the lessor, it is a e Textbook and Media List of Accounts Suppose Bramble did not guarantee any amount of the expected residual value. Prepare the journal entries for Cullumber for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease payments) Dec. 31 (To record lease revenue) Dec. 31 (To record depreciation) e Textbook and Media List of Accounts

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_2

Step: 3

blur-text-image_3

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

Information Technology Auditing

Authors: Hall, J Scott Harr

3rd Edition

1133008046, 978-1439079119

More Books

Students also viewed these Accounting questions

Question

=+What is the most challenging part of working in social media?

Answered: 1 week ago