Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help on E21-9 and show your work! Thank you. E21-8 (L02,4) EXCEL (Lessor Entries, Sales-Type Lease) Crosley Company, a machinery dealer, leased a machine

Please help on E21-9 and show your work! Thank you. image text in transcribed
E21-8 (L02,4) EXCEL (Lessor Entries, Sales-Type Lease) Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $35,004 at the beginning of each year. The first payment is received on January 1, 2017. Crosley had purchased the machine during 2016 for $160,000. Collectibility of lease payments by Crosley is probable Crosley set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crosley at the termination of the lease. Instructions (a) Compute the amount of the lease receivable. (b) Prepare all necessary journal entries for Crosley for 2017 (0) Suppose the collectibility of the lease payments was not probable for Crosley. Prepare all necessary journal entries for the company in 2017 (d) Suppose at the end of the lease term, Crosley receives the asset and determines that it actually has a fair value of $1,000 instead of the anticipated residual value of So. Record the entry to recognize the receipt of the asset for Crosley at the end of the lease term. E21-9 (LO2,4) (Lessee Entries; Initial Direct Costs) Use the information for Crosley Company in E21-8. Assume that Dexter Corporation does not know the rate implicit in the lease used by Crosley, and Dexter's incremental borrowing rate is 8%. In addition, assume that Dexter incurs initial direct costs of $15,000 Instructions (a) Compute the amount of the lease liability and right-of-use asset for Dexter (b) Prepare all necessary journal entries for Dexter for 2017

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_2

Step: 3

blur-text-image_3

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

Practical Steps To Forensic Auditing And Fraud Investigation

Authors: Enape Victoria Ayishetu

1st Edition

1669867048, 978-1669867043

More Books

Students also viewed these Accounting questions