Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sandhill Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020, that requires 6 annual payments of $33,000 each, beginning

image text in transcribedimage text in transcribed

Sandhill Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020, that requires 6 annual payments of $33,000 each, beginning September 1, 2020. In addition, Sandhill guarantees the lessor a residual value of $23,000 at lease end. The equipment has a useful life of seven years. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE OF 1. Your answer is partially correct. Using (1) tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the capital lease and prepare Sandhill's September 1, 2020 journal entry assuming an interest rate of 10%. (Credit account titles are automatically indented when the 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 factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Debit Credit Account Titles and Explanation Equipment under Lease Obligations under Lease Cash (To record inception of lease and first lease payment.) Assume instead that Sandhill follows IFRS and that the amount expected to be paid under the residual value guarantee is $8,000. Calculate the amount of the right-of-use asset and prepare Sandhill's September 2020 journal entry, assuming an interest rate of 10%. (Credit account titles are automatically indented when the 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 factor values to 5 decimal places, e.g. 1.25124 and final answers to decimal places, eg. 5,275.) Debit Credit Account Titles and Explanation Right-of-Use Asset Lease Liability Cash (To record inception of lease and first lease payment.)

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

College Accounting A Practical Approach Chapters 1-25

Authors: Jeffrey Slater, Mike Deschamps

15th Edition

0137504284, 9780137504282

More Books

Students also viewed these Accounting questions