Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help me with this problem. Thank you! 3. (21 points) he On January 1, 2015, BMC Company leased equipment to Pioneer Tech Co. for

please help me with this problem. Thank you! image text in transcribed
3. (21 points) he On January 1, 2015, BMC Company leased equipment to Pioneer Tech Co. for a two year period ending December 31, 2016. At the end of the lease term, the leased asset will be reverted back to BMC Company. The fair value of the equipment is $43,141 and has an expected useful life of three years. The lessee-guaranteed residual value at the end of the non-cancelable lease term is $6,000 with an expected residual value of $3,000. The annual lease payment is $20,000 and is due on January 1 of each year with the first payment on 1/1/2015. The collectiblility of the remaining lease payments is reasonably assured. Both BMC Company and Pioneer Tech Co. use 10% discount rate and straight- line depreciation. 0) Required: a. Show how BMC Company calculated the $20,000 annual lease payment. b. How should this lease be classified by Pioneer Tech Co. (the lessee) and by BMC Company (the lessor)? c. Prepare the appropriate entries for Pioneer Tech Co. on 1/1/2015, 12/31/2015. 1/1/2016 and 12/31/2016 (assuming that the equipment was reverted back to BMC and the residual value of the equipment on 12/31/2016 is $2.000 (Note: these entries should be prepared based on finance lease for Pioneer Tech regardless of your answer in b)

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

Step: 3

blur-text-image

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

Mis And Edp Auditing For Accountants And Auditors

Authors: Srv

1st Edition

9993730351, 978-9993730354

More Books

Students also viewed these Accounting questions

Question

=+18.7. Reconsider Problem 12.12.

Answered: 1 week ago