Ivanhoe Company, a machinery dealer, leased a machine to Oriole Corporation on January 1, 2025. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Ivanhoe Company, a machinery dealer, leased a machine to Oriole Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $31,300 at the beginning of each year. The first payment is received on January 1, 2025. Ivanhoe had purchased the machine during 2024 for $170,000. Collectibility of lease payments by Ivanhoe is probable. Ivanhoe set the annual rental to ensure a 7% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Ivanhoe at the termination of the lease. Assume that Oriole Corporation does not know the rate implicit in the lease used by Ivanhoe, and Oriole's incremental borrowing rate is 9%. In addition, assume that Oriole incurs initial direct costs of $13,000. Click here to view factor tables. (a) (b) Prepare all necessary journal entries for Oriole for 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when 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 answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Date 1/1/25 Account Titles and Explanation Debit 1/1/25 (To record the lease) 12/31/25 + (To record the first lease payment) 12/31/25 (To record interest expense) (To record amortization of the right-of-use asset) Ivanhoe Company, a machinery dealer, leased a machine to Oriole Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $31,300 at the beginning of each year. The first payment is received on January 1, 2025. Ivanhoe had purchased the machine during 2024 for $170,000. Collectibility of lease payments by Ivanhoe is probable. Ivanhoe set the annual rental to ensure a 7% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Ivanhoe at the termination of the lease. Assume that Oriole Corporation does not know the rate implicit in the lease used by Ivanhoe, and Oriole's incremental borrowing rate is 9%. In addition, assume that Oriole incurs initial direct costs of $13,000. Click here to view factor tables. (a) (b) Prepare all necessary journal entries for Oriole for 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when 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 answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Date 1/1/25 Account Titles and Explanation Debit 1/1/25 (To record the lease) 12/31/25 + (To record the first lease payment) 12/31/25 (To record interest expense) (To record amortization of the right-of-use asset)
Expert Answer:
Related Book For
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
Students also viewed these accounting questions
-
Questions:In1992,during the response to Hurricane Andrew,the U.S.Army and the U.S.Coast Guard performed emergency search and rescue work which was considered to be outstanding by many government...
-
Buoyancy: The wood log shown in Figure 2 is 0.15 m by 0.35 m in cross-section. Determine: a. Unit weight of the wood log. b. Tension in the rope. -Rope 8 m 2 m Figure 2: Tethered log 0.15 m Water
-
The "law of equivalent retaliation" was an early form of: A. federalization B. retribution C. deterrence D. rehabilitation The rising crime rate of the 1980s was fuled by: A. a large population of 30...
-
2. Cash basis $(3,400)Fantastic Catering completed the following selected transactions during May 2016: May 1 Prepaid rent for three months, $1,800. 5 Received and paid electricity bill, $200. 9...
-
The solubility of Cr(NO3)3 ( 9 H2O in water is 208 g per 100 g of water at 15oC. A solution of Cr(NO3)3 ( 9 H2O in water at is formed by dissolving 324 g in 100 g water. When this solution is slowly...
-
Stock Dividend Effects If a firm has retained earnings of $3 million, a common shares account of $5 million, and additional paid-in capital of $10 million, how would these accounts change in response...
-
Tell whether each of the following transactions related to an office building is a revenue expenditure (RE) or a capital expenditure (CE). In addition, indicate whether each transaction is an...
-
Suppose the two countries we considered in the numerical example on pages 166169 were to integrate their automobile market with a third country, which has an annual market for 3.75 million...
-
A preferred stock paying a dividend of Sh. 5 and having a required return of 13% will have a value of
-
A 50.0-mL portion of a solution containing 0.200 g of BaCl2 2H2O is mixed with 50.0 mL of a solution containing 0.300 g of NaIO3. Assume that the solubility of Ba(IO3)2 in water is negligibly small...
-
Question 1: Suppose that bank of NYUSHI has to pay 2,000 one year from now and 5.000 three years from now. The yearly yield is 10%. Assume that the bank hires your services in order to immunize the...
-
What accounting problem is specifically associated with the taxation of international businesses?
-
Given 2017 Sales Growth Rate (Blank), Taxes 52.23%, Dividend Payout Ratio (Blank), Does INTC Need EFN (or AFN) in 2018 (Blank), EFN (or EFN) (Blank) Forecast: 2018- Sales Growth Rate, Taxes,...
-
You purchase a home in Los Angeles for $ 1 , 0 0 0 , 0 0 0 . Your interest rate is 4 % and you put down 2 5 % of the purchase price. How much is your monthly payment if you have a 1 5 year loan? Set...
-
In the next few years, is the U.S. Government likely to revise the current U.S. corporate tax system to encourage companies to provide college loan payments as an employee benefit?
-
A patient present with dehydration, hypotension and fever. Lab testing reveals hyponatremia, hyperkalemia and hypoglycemia. These imbalance are corrected, burt the patient returnes 6 weeks later with...
-
Hello, could you kindly assist with the attached?. 1.2 REQUIRED Use the information provided below to prepare the budgeted Statement of Comprehensive Income for the year ended 28 February 2022. (5...
-
What are the main distinctions between the different schools of legal interpretation?
-
Revise cash collections budget (Learning Objective 4) Turn to the original Whitewater Sporting Goods Data Set item 4. Suppose \(70 \%\) of sales are cash and \(30 \%\) are credit. Revise Whitewater's...
-
Revise inventory, purchases, and cost of goods sold budget (Learning Objective 4) Refer to the original Whitewater Sporting Goods Data Set item 5. Suppose cost of goods sold averages \(75 \%\) of...
-
Revise cash payments for purchases (Learning Objective 4) Refer to the original Whitewater Sporting Goods Data Set item 5. Suppose Whitewater Sporting Goods pays for \(60 \%\) of inventory purchases...
Study smarter with the SolutionInn App