Sheridan Company on January 1, 2021, enters into a 9-year noncancelable lease for equipment having an estimated useful life of 10 years and a fair value to the lessor, Daly Corp., at the inception of the lease of $4,350,000. Sheridan's incremental borrowing rate is 6%. Sheridan uses the straight-line method to depreciate its assets. The lease contains the following provisions: 1 2. Rental payments of $274,000 are payable at the beginning of each six-month period. An option allowing the lessor to extend the lease one year beyond the lease term. Aguarantee by Sheridan Company that Daly Corp. will realize $240,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be $114,000. 3. Click here to view factor tables. What kind of lease is this to Sheridan Company? List of Accounts What should be considered the lease term? What should be considered the lease term? The lease term years List of Accounts What is the present value of the lease payments (1) for classification of the lease and (2) for measurement of the lease liability? (Round final answers to O decimal place, e.g. 5,432.) 1. $ 2. $ List of Accounts What journal entries would Sheridan record during the first year of the lease? (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal What journal entries would Sheridan record during the first year of the lease? (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Account Titles and Explanation Debit Credit (To record lease) (To record first lease payment) (To record amortization) Account Titles and Explanation Debit Credit (To record lease) (To record first lease payment) + (To record amortization) (To record interest payment) Sheridan Company on January 1, 2021, enters into a 9-year noncancelable lease for equipment having an estimated useful life of 10 years and a fair value to the lessor, Daly Corp., at the inception of the lease of $4,350,000. Sheridan's incremental borrowing rate is 6%. Sheridan uses the straight-line method to depreciate its assets. The lease contains the following provisions: 1 2. Rental payments of $274,000 are payable at the beginning of each six-month period. An option allowing the lessor to extend the lease one year beyond the lease term. Aguarantee by Sheridan Company that Daly Corp. will realize $240,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be $114,000. 3. Click here to view factor tables. What kind of lease is this to Sheridan Company? List of Accounts What should be considered the lease term? What should be considered the lease term? The lease term years List of Accounts What is the present value of the lease payments (1) for classification of the lease and (2) for measurement of the lease liability? (Round final answers to O decimal place, e.g. 5,432.) 1. $ 2. $ List of Accounts What journal entries would Sheridan record during the first year of the lease? (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal What journal entries would Sheridan record during the first year of the lease? (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Account Titles and Explanation Debit Credit (To record lease) (To record first lease payment) (To record amortization) Account Titles and Explanation Debit Credit (To record lease) (To record first lease payment) + (To record amortization) (To record interest payment)
