Zens Manufacting makes koto tone rings for popular kotomakers To expand capacity, the company decided to lease a new machine used in tone ring turning and plating from SJP The machine is similar to that used by other tone ring makers The following is information about the lease terms Lease Payment $75,000 semi annually at the beginning of each period Lease Term 4 years with semi annual payments, beginning June 30, 2019 Residual Value $0 Bargain Purchase Option No Expected Life of Machine 6 Years Implicit Interest Rate 10 Fair Value and cost of Asset $550,000 Create lease amortization schedule and prepare appropriate journal entries for both the lessee and lessor from beginning of the lease through the second lease payment on Dec 31, 2016 Assume the lessee made a warranty claim of $100,000 on the leased asset at the end of 2016 due to an issue with the machine This warranty claim caused the lessor to book warranty expense in 2016 (although the cash flow did not occur until 2017), creating a temporary book tax difference for the lessor Using a tax rate of 40 , calculate the amount of the DTA DTL created for the lessor and prepare the appropriate journal entry to record income taxes at the end of 2016 for the lessor (PTAI of $2 2 million)

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Zens Manufacting makes koto tone rings for popular kotomakers. To expand capacity, the company decided to lease a new machine used in tone ring turning

Zens Manufacting makes koto tone rings for popular kotomakers. To expand capacity, the company decided to lease a new machine used in tone ring turning and plating from SJP. The machine is similar to that used by other tone ring makers. The following is information about the lease terms:

Lease Payment - $75,000 semi-annually at the beginning of each period

Lease Term - 4 years with semi-annual payments, beginning June 30, 2019

Residual Value - $0

Bargain Purchase Option - No

Expected Life of Machine - 6 Years

Implicit Interest Rate - 10%

Fair Value and cost of Asset - $550,000

Create lease amortization schedule and prepare appropriate journal entries for both the lessee and lessor from beginning of the lease through the second lease payment on Dec. 31, 2016.
Assume the lessee made a warranty claim of $100,000 on the leased asset at the end of 2016 due to an issue with the machine. This warranty claim caused the lessor to book warranty expense in 2016 (although the cash flow did not occur until 2017), creating a temporary book-tax difference for the lessor. Using a tax rate of 40%, calculate the amount of the DTA/DTL created for the lessor and prepare the appropriate journal entry to record income taxes at the end of 2016 for the lessor (PTAI of $2.2 million).