Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sunland Corporation manufactures specialty equipment with an estimated economic life of 1 2 years and leases it to Provincial Airlines Corp., for a period of
Sunland Corporation manufactures specialty equipment with an estimated economic life of years and leases it to Provincial Airlines Corp., for a period of years. Both Sunland and Provincial Airlines follow ASPE. The equipment's normal selling price is $ and its unguaranteed residual value at the end of the lease term is estimated to be $ Provincial Airlines will make annual payments of $ at the beginning of each year and pay for all maintenance and insurance. Sunland incurred costs of $ in manufacturing the equipment and $ in negotiating and closing the lease. Sunland has determined that the collectibility of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicit interest rate is Provincial Airlines Corp. has an incremental borrowing rate of
What classification will Provincial Airlines give to the lease, capital or operating lease?
What difference, if any, would occur in the classification of the lease if Provincial Airlines were using IFRS? Would it be a finance lease, right of use asset and lease liability or operating lease?
Calculate the amount of the initial obligation under capital leases. Round foctor volues to decimal ploces, eg and fimal answer to O decimal ploces, eg
Prepare a year lease amortization schedule for the lease obligation using Excel, Round answers to O decimal places, eg
Prepare all of the lessee's journal entries for the first year, assuming that the lease year and Provincial Airlines' fiscal year are the same. List all debit entries before credit entries. 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 O for the amounts. Round answers to O decimal places, eg
Prepare the entries in part f again, assuming that the residual value of $ was guaranteed by the lessee. List all debit entries before credit entries. 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 O for the amounts. Round answers to O decimal ploces, eg
Prepare the entries in part f again, assuming a residual value at the end of the lease term of $ and a purchase option of $List all debit entries before credit entries. Credit account titles ore 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 O for the amounts. Round factor values to decimal places, eg and finol answers to O decimal places, eg
Prepare a schedule highlighting the differerices in the journal entries prepared in part f which assumes an unguaranteed residual value of $ and part h which assumes a guaranteed residual value of $List all debit entries before credit entries. 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 O for the amounts. Round answers to O decimal places, eg
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started