{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-05-27T19:08:25-04:00", "answer_date": "2024-05-27 19:08:25", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "1796414", "url": "\/study-help\/questions\/of-present-value-of-the-rental-payments-is-115753-for-1796414", "question_creation_date_js": "2024-05-27T19:08:25-04:00", "question_creation_date": "May 27, 2024 07:08 PM", "meta_title": "[Solved] of present value of the rental payments i | SolutionInn", "meta_description": "Answer of - of present value of the rental payments is $115,753. For the be reported on its income statement for the sale-leasebac | SolutionInn", "meta_keywords": "present,value,rental,payments,$115,753,reported,income,statement,sale-leaseback,transaction,problems,p21-1", "question_title_h1": " of present value of the rental payments is $115,753. For the be reported on its income statement for the sale-leaseback transaction. PROBLEMS P21-1 (L02,4)", "question_title": " of present value of the rental payments is $115,753. For the", "question_title_for_js_snippet": "of present value of the rental payments is $115,753 For the be reported on its income statement for the sale leaseback transaction PROBLEMS P21 1 (L02,4) (Lessee Lessor Entries, Sales Type Lease) Glaus Leasing Company agrees to lease machinery to Jensen Cor non January 1, 2017 The following information relates to the lease agreement poration 1 The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years 2 The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2017, is $700,000 3 At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $100,000 Jensen depreci ates all of its equipment on a straight line basis 4 The lease agreement requires equal annual rental payments, beginning on January 1, 2017 5 The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor 6 Glaus desires a 10 rate of return on its investments Jensen's incremental borrowing rate is 11 , and the lessor's implicit rate is unknown Instructions (Assume the accounting period ends on December 31 ) (a) Discuss the nature of this lease for both the lessee and the lessor (b) Calculate the amount of the annual rental payment required (c) Compute the present value of the minimum lease payments (d) Prepare the journal entries Jensen would make in 2017 and 2018 related to the lease arrangement (e) Prepare the journal entries Glaus would make in 2017 and 2018 ", "question_description": "\"image", "transcribed_text": "of present value of the rental payments is $115,753. For the be reported on its income statement for the sale-leaseback transaction. PROBLEMS P21-1 (L02,4) (Lessee-Lessor Entries, Sales-Type Lease) Glaus Leasing Company agrees to lease machinery to Jensen Cor- non January 1, 2017. The following information relates to the lease agreement. poration 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2017, is $700,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $100,000. Jensen depreci- ates all of its equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2017. 5. The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. 6. Glaus desires a 10% rate of return on its investments. Jensen's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. Instructions (Assume the accounting period ends on December 31.) (a) Discuss the nature of this lease for both the lessee and the lessor. (b) Calculate the amount of the annual rental payment required. (c) Compute the present value of the minimum lease payments. (d) Prepare the journal entries Jensen would make in 2017 and 2018 related to the lease arrangement. (e) Prepare the journal entries Glaus would make in 2017 and 2018.", "related_book": { "title": "Intermediate Accounting", "isbn": "978-1118159644, 9781118562185, 1118159640, 1118147294, 978-1118147290", "edition": "15th edition", "authors": "Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/253.jpg", "uri": "\/textbooks\/intermediate-accounting-15th-edition-253", "see_more_uri": "" }, "free_related_book": { "isbn": "0470537868", "uri": "\/textbooks\/beginning-xml-databases-1st-edition-978-0470537862-168446", "name": "Beginning Xml Databases", "edition": "1st Edition" }, "question_posted": "2024-05-27 19:08:25", "see_more_questions_link": "\/study-help\/questions\/business-finance-2024-September-21", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/questions\/you-are-the-newly-appointed-financial-manager-of-the-shoebox-331101", "description": "You are the newly appointed financial manager of The Shoebox (Pty) Ltd, which operates a chain of 20 large retail shoe stores in and around Port Elizabeth, selling on a cash-only basis. 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