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Please answer everything. If you're not sure, please don't answer. I keep getting wrong explanations and answers. Tamarisk Leasing Company agrees to lease equipment to
Please answer everything. If you're not sure, please don't answer. I keep getting wrong explanations and answers.
Tamarisk Leasing Company agrees to lease equipment to Vaughn Corporation on January 1, 2020. The following information relates to the lease agreement. 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 $541,000, and the fair value of the asset on January 1, 2020, is $760,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000. Vaughn estimates that the expected residual value at the end of the lease term will be 45,000. Vaughn amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Tamarisk desires a 10% rate of return on its investments. Vaughn's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables. Your answer is correct. Discuss the nature of this lease for both the lessee and the lessor. This is a finance lease for Vaughn. This is a sales-type lease for Tamarisk. e Textbook and Media List of Accounts Your answer is correct. Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Annual rental payment $ 137,604 e Textbook and Media List of Accounts Your answer is correct. Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Present value of minimum lease payments $ 719,743 e Textbook and Media List of Accounts Your answer is partially correct. Prepare the journal entries Vaughn would make in 2020 and 2021 related to the lease arrangement. (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 for the amounts. Round answers to 0 decimal places e.g. 58,972. Record journal entries in the order presented in the problem.) Debit Credit Date 1/1/20 4 741,418 Account Titles and Explanation Right-of-Use Asset Lease Liability (To record the lease.) Lease Liability 741,418 137,064 137,064 Cash (To record lease payment.) Depreciation Expense 12/31/20 4 99,488 99,488 Accumulated Depreciation Equipment (To record amortization.) Interest Expense 66,479 66,479 Interest Payable (To record interest.) Lease Liability 1/1/21 70,585 Interest Expense 66,479 (12/31/21 4 Depreciation Expense Accumulated Depreciation-Equipment (To record amortization.) Interest Expense Interest Payable (To record interest.) * Your answer is incorrect. Prepare the journal entries Tamarisk would make in 2020 and 2021 related to the lease arrangement. (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. 58,972. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease.) (To record lease payment.) Tamarisk Leasing Company agrees to lease equipment to Vaughn Corporation on January 1, 2020. The following information relates to the lease agreement. 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 $541,000, and the fair value of the asset on January 1, 2020, is $760,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000. Vaughn estimates that the expected residual value at the end of the lease term will be 45,000. Vaughn amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Tamarisk desires a 10% rate of return on its investments. Vaughn's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables. Your answer is correct. Discuss the nature of this lease for both the lessee and the lessor. This is a finance lease for Vaughn. This is a sales-type lease for Tamarisk. e Textbook and Media List of Accounts Your answer is correct. Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Annual rental payment $ 137,604 e Textbook and Media List of Accounts Your answer is correct. Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Present value of minimum lease payments $ 719,743 e Textbook and Media List of Accounts Your answer is partially correct. Prepare the journal entries Vaughn would make in 2020 and 2021 related to the lease arrangement. (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 for the amounts. Round answers to 0 decimal places e.g. 58,972. Record journal entries in the order presented in the problem.) Debit Credit Date 1/1/20 4 741,418 Account Titles and Explanation Right-of-Use Asset Lease Liability (To record the lease.) Lease Liability 741,418 137,064 137,064 Cash (To record lease payment.) Depreciation Expense 12/31/20 4 99,488 99,488 Accumulated Depreciation Equipment (To record amortization.) Interest Expense 66,479 66,479 Interest Payable (To record interest.) Lease Liability 1/1/21 70,585 Interest Expense 66,479 (12/31/21 4 Depreciation Expense Accumulated Depreciation-Equipment (To record amortization.) Interest Expense Interest Payable (To record interest.) * Your answer is incorrect. Prepare the journal entries Tamarisk would make in 2020 and 2021 related to the lease arrangement. (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. 58,972. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease.) (To record lease payment.)Step by Step Solution
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