Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Splish Brothers Corporation leases a building to Sunland, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Splish Brothers Corporation leases a building to Sunland, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 10 years with equal annual rental payments of $3,683 at the end of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $34,700, a book value to Splish Brothers of $21,100, and a useful life of 15 years. 4. At the end of the lease term, Splish Brothers and Sunland expect the residual value of the building to be $13,600, and this amount is guaranteed by Money, Inc., a third party. 5. Splish Brothers wants to earn a 6% return on the lease, and collectibility of the payments is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the foctor table provided.) Assume the present value of lease payments and third-party guarantee is $34,700 and the rate of return to amortize the net lease recelvable to zero is 15.77\%. Prepare the amortization schedules Splish Brothers would use to amortize the net lease receivable to zero. (Round answers to 0 decimal places, e.g. 5.275.) SPLISH BROTHERS CORPORATION (Lessor) Lease Amortization Schedule Sales-Type Lease SPLISH BROTHERS CORPORATION (Lessor) Lease Amortization Schedule Direct Financing Lease 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27 12/31/28 12/31/29 12/31/29

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

Intermediate Accounting 2007 FASB Update Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

12th Edition

0470128763, 978-0470128763

More Books

Students also viewed these Accounting questions