Provide the answer for each problem below:
PROBLEM 1: Lessor accounting - Direct Financing On January 1, 2020, Dandelion Corp. a finance company leased one of its buildings to Priscilla Co. under the following terms: Cost of the building 1,268,000 Useful life 5 years Term of the lease 4 years Annual payments every December 31 400,000 Implicit rate of 10% Incremental borrowing rate 12% Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) 1. Compute the amount of gross investment for the lease. (for PV factors use 4 decimal places) 2. Compute the amount of net investment for the lease. 3. Compute the amount of unearned interest income on January 1, 2020. 4. Prepare an amortization table for the lease receivable. 5. Prepare the journal entries in the books of Dandelion Corp. for the year 2020.PROBLEM 2: Lessor accounting - Sales-type Lease On January 1, 2019, Shani Corp, a dealer in machinery had the following provisions for a lease contract: Annual rentals every December 31 starting in 2019 P 800,000 Lease term & useful life of machinery 5 years Cost of machinery 2,250,000 Implicit rate 10% Present value of annuity of 1 for 5 years at 10% 3.79 Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) 1. Compute the amount of gross investment for the lease. 2. Compute the amount of net investment for the lease. 3. Compute the amount of unearned interest income on January 1, 2019. 4. Sales 5. Cost of sales 6. Gross profit 7. Prepare an amortization table for the lease receivable. 8. Prepare the journal entries in the books of Shani Corp. for the year 2019.PROBLEM 3: Lessor accounting - With guaranteed residual value On December 31, 2019, DACS Corporation leased a machine to CAS Company for a five-year period requiring payments of P100, 000 every December 31. The first periodic payment is due December 31, 2019. The machine cost P466, 664, which is the fair value at the commencement date. The machine has a useful life of six years with P80, 000 residual value guaranteed by the lessee at the end of the lease term. DACS Corporation's implicit interest rate is 10%. DACS Corporation appropriately recorded the lease as a direct financing lease. (PV factors use 4 decimal places]. Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) 1. Compute the amount of gross investment. 2. Compute the amount of net investment. 3. Compute the amount of unearned interest income. 4. Prepare the amortization table for the lease receivable. 5. Prepare the necessary journal entries for 2019.PROBLEM 4: Lessor accounting - With unguaranteed residual value On December 31, 2019, XYZ Corporation leased a machine to ABC Company for a five-year period requiring payments of P100, 000 every December 31. The first periodic payment is due December 31, 2019. The machine cost P466, 664, which is the fair value at the commencement date. The machine has a useful life of six years with P80, 000 residual value unguaranteed by the lessee at the end of the lease term. XYZ Corporation's implicit interest rate is 12%. XYZ Corporation appropriately recorded the lease as a direct financing lease. (PV factors use 4 decimal places). Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) 1. Compute the amount of gross investment. 2. Compute the amount of net investment. 3. Compute the amount of unearned interest income. 4. Prepare the amortization table for the lease receivable. 5. Prepare the necessary journal entries for 2019. PROBLEM 5: Lessor accounting - With initial direct cost On December 31, 2019, PSD Corporation leased a machine to ABC Company for a five-year period requiring payments of P120,000.00 every December 31. The first periodic payment is due December 31, 2019. The machine cost P450, 000 which is the fair value at the commencement date. The machine has a useful life of five years, with no expected residual value. Initial direct cost incurred in consummating this lease is P34, 500.00. PSD Corporation appropriately recorded the lease as a direct financing lease. PSD Corporation's implicit interest rate is 10%. (PV factors use 4 decimal places). Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) 1. Compute the amount of gross investment. 2. Compute the amount of net investment. 3. Compute the amount of unearned interest income. 4. Prepare the amortization table for the lease receivable. 5. Prepare the necessary journal entries for 2019.PROBLEM 6: Lessor accoun . . : - With initial direct cost TNC Mfg. Company uses the lease as a means of selling the equipment that it manufactures. The company uses a perpetual inventory system. On January 1, 2019, the company leased a machine to ABC Company. The cost of the machine to THE was P350, 000.00. The machine is expected to have a residual value of P100, 000.00 at the end of the lease term for 6 years. The machine has an estimated useful life of? years. Annual lease payments are P 250,000.00 payable at the end of each year beginning December 31, 2019. TNC Mfg. Company is a calendar-year corporation. The rate implicit is the lease is 10%. The present value of P1 at 10% for 6 periods is 0.564 and the present value of an ordinary annuity of P1 in 6 years at 10% is 4.355. Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) 1. Compute the amount of gross investment. 2. Compute the amount of net investment. 3. Compute the amount of unearned interest income. 4. Compute the amount of Gross Profit 5. Prepare the amortization table for the lease receivable. 6. Amortization TablePROBLEM 7: Sale and leaseback At the beginning of current year, World Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction: Sale price at fair value 5,000,000 Carrying amount of machine 6,000,000 Annual rental payable at the end of each year 500,000 Lease term 5 years Remaining life of machine 20 years Implicit interest rate 6% PV of an ordinary annuity of 1 at 6% for 5 periods 4.21 Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any) 1. What is the initial lease liability? 2. What is the amount presented as right-of-use asset? 3. What is the gain or loss on right transferred to the buyer-lessor? 4. Prepare the journal entry to record the leaseback transaction.PROBLEM 8: Sale and leaseback At the beginning of current year, Earth Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction: Selling price 5,000,000 Fair value 6,000,000 Carrying amount of machine 4,500,000 Annual rental payable at the end of each year 500,000 Lease term 5 years Remaining life of machine 20 years Implicit interest rate 6% PV of an ordinary annuity of 1 at 6% for 5 periods 4.21 Requirements: (round off all transfer rates to 6 decimal places, and all computed peso values to the nearest peso.) 1. What is the initial lease liability? 2. What is the amount presented as right-of-use asset? 3. What is the gain or loss on right transferred to the buyer-lessor? 4. Prepare the journal entry to record the leaseback transaction.PROBLEM 9: Sale and leaseback At the beginning of current year, Universe Company sold a machine and immediately leased it back. The following data pertain to the sale and leaseback transaction: Selling price 6,000,000 Fair value 5,500,000 Carrying amount of machine 4,500,000 Annual rental payable at the end of each year 500,000 Lease term 5 years Remaining life of machine 20 years Implicit interest rate 6% PV of an ordinary annuity of 1 at 6% for 5 periods 4.21 Requirements: (round off all transfer rates to 6 decimal places, and all computed peso values to the nearest peso.) 1. What is the initial lease liability? 2. What is the amount presented as right-of-use asset? 3. What is the gain or loss on right transferred to the buyer-lessor? 4. Prepare the journal entry to record the leaseback transaction
