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Kingbird enters into an agreement with Traveler Inc. to lease a car on December 31, 2019. The following information relates to this agreement. 1. 2.
Kingbird enters into an agreement with Traveler Inc. to lease a car on December 31, 2019. The following information relates to this agreement. 1. 2. 3. The term of the non-cancelable lease is 3 years with no renewal or bargain purchase option. The remaining economic life of the car is 3 years, and it is expected to have no residual value at the end of the lease term. The fair value of the car was $13,650 at commencement of the lease. Annual payments are required to be made on December 31 at the end of each year of the lease, beginning December 31, 2020. The first payment is to be of an amount of $5,053.00, with each payment increasing by a constant rate of 5% from the previous payment (i.e., the second payment will be $5,305.65 and the third and final payment will be $5,570.93). Kingbird' incremental borrowing rate is 8%. The rate implicit in the lease is unknown. Kingbird uses straight-line depreciation for all similar cars. 4. 5. (a) Prepare Kingbird' journal entries for 2019, 2020, and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 2 decimal places, e.g. 5,275.25. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit (To record interest expense) (To record amortization of the right-of-use asset) (To record interest expense) (To record amortization of the right-of-use asset) Click if you would like to Show Work for this question: Open Show Work On December 31, 2019, Marin Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Marin to make annual payments of $8,566 at the beginning of each year, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $4,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Marin uses the straight-line method of depreciation for all of its plant assets. Marin's incremental borrowing rate is 4%, and the lessor's implicit rate is unknown. Click here to view factor tables. What type of lease is this? This is a/an lease. SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Present value of the lease payments SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT
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