mpany purchasedaProblem 10-32 (IFRS)under afinanceAt the beginning of current year, Southstar Company leaseda building with the following information:ity were originallyAnnual rental payable at the end of each lease yearInitial direct cost paidLease incentive receivedLease bonus paid to lessor before commencement of leasePresent value of cost of restoring the buildingas required by contract discounted at 8%Purchase option that is reasonably certainLease termUseful life of buildingImplicit inierest ratePresent value of an ordinary annuity of 1 at 10% for 6 periodsPresent value of 1 at 10% for 6 periods1,500,000405,00050,000300,000lated depreciationand the remaining0,000.-P1,500,000 cash.945,0001,000,0006 years10 years10%4.360.56of the machinery1. What amount should be recorded initially as cost of rightof use asset?a. 8,750,000b. 8,700,000c. 9,900,000d. 7,755,0002. What amount should be recorded as annual depreciationof the right of the asset?sed an equipmentrecorded the assetotion of P100,000.a. 1,450,000b. 1,550,000870,000d.easonably certainC.875,000and a fair value3. What total amount should be reported as interestexpense for the current year?a. 785,600b. 710,000C. 804.500d. 729,600cise the purchaseld be recognizeding the purchase4. What amount should be reported as lease liability atyear-enda. 6,310,000b. 7,100,000c. 9,060,000d. 5,600,000365

Lease - An agreement known as a lease which states the conditions where one party of the lease…

Problem 10-32 (IFRS) At the beginning of current year, Southstar Company leased a building with the following information: Annual rental payable at the end of each lease year Initial direct cost paid Lease incentive received Lease bonus paid to lessor before commencement of lease Present value of cost of restoring the building as required by contract discounted at 8% Purchase option that is reasonably certain Lease term Useful life of building Implicit interest rate Present value of an ordinary annuity of 1 at 10% for 6 periods Present value of 1 at 10% for 6 periods a. 8,750,000 b. 8,700,000 c. 9,900,000 d. 7,755,000 1. What amount should be recorded initially as cost of right of use asset? a. 1,450,000 b. 1,550,000 870,000 875,000 C. d. 1,500,000 405,000 50,000 300,000 2. What amount should be recorded as annual depreciation of the right of the asset? 945,000 1,000,000 6 years 10 years 10% a. 785,600 b. 710,000 c. 804.500 d. 729,600. 4.36 0.56 3. What total amount should be reported as interest expense for the current year? a. 6,310,000 b. 7,100,000 c. 9,060,000 d. 5,600,000 . What amount should be reported as lease liability at year-end

Problem 10-32 (IFRS) At the beginning of current year, Southstar Company leased a building with the following information: Annual rental payable at the end of each lease year Initial direct cost paid Lease incentive received Lease bonus paid to lessor before commencement of lease Present value of cost of restoring the building as required by contract discounted at 8% Purchase option that is reasonably certain Lease term Useful life of building Implicit interest rate Present value of an ordinary annuity of 1 at 10% for 6 periods Present value of 1 at 10% for 6 periods a. 8,750,000 b. 8,700,000 c. 9,900,000 d. 7,755,000 1. What amount should be recorded initially as cost of right of use asset? a. 1,450,000 b. 1,550,000 870,000 875,000 C. d. 1,500,000 405,000 50,000 300,000 2. What amount should be recorded as annual depreciation of the right of the asset? 945,000 1,000,000 6 years 10 years 10% a. 785,600 b. 710,000 c. 804.500 d. 729,600. 4.36 0.56 3. What total amount should be reported as interest expense for the current year? a. 6,310,000 b. 7,100,000 c. 9,060,000 d. 5,600,000 . What amount should be reported as lease liability at year-end

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...

See similar textbooks

Similar questions

At the beginning of current year, an entity leased an equipment from a lessor with the following pertinent information: Annual rental payable at the end of each year 1,000,000 Initial direct cost paid 400,000 Lease bonus paid to lessor before commencement of the lease 300,000 Lease incentive received 100.000 Discounted amount of restoring building as required by contract 700,000 Leasehold improvement 200,000 Purchase option that is reasonably certain to be exercised 500,000 Lease term 5 years Useful life of equipment…
At the beginning of current year , EDSA company leased a building with the following information: 1) Annual fixed payment in advance at the beginning of each lease year -1,000,000 2) initial direct cost paid 350,000 3) Lease incentive received -150,000 4) Lease bonus paid to lessor before commencement of lease- 100,000 5) Present value of cost of restoring the building as required by contract discounted at 6% -200,000 6) Purchase option that is not reasonably certain to be exercised - 300,000.00 7) Lease term 5 years 8) Implicit interest rate 8% 9) PV of an annuity of 1 in advance at 8% for 5 periods 4.31 10) PV of 1 at 8% for 5 periods .68. What is the initial lease liability? 4,310,000.00 4,614,000.00 4,764,000.00 4,514,000.00 Answer fast with solution
renewal had a full depreciation warehouse The had an to the lease During the improvement On is the of the to the The of was P540,000 on this for 2021. On the to the Problem 34-21 (AICPA Adapted) At the beginning of current year, Hart Company signed an agreement to operate as a franchisee for an initial franchise fee of P6,000,000. On the same date, the entity paid P2,000,000 and agreed to pay the balance in four equal annual payments of P1,000,000 at every year-end. The down payment is not refundable and no future services are required of the franchisor. The entity can borrow at 14% for a loan of this type. Present value of 1 at 14% for 4 periods 0.59 Present value of an ordinary annuity of 1 at 14% for 4 periods What amount should be recorded as initial cost of the franchise? a. 6,760,000 b. 6,000,000 C. 4,910,000 d. 4,360,000 Problem 34-22 (AICPA Adapted) On January 1, 2019, Averse Company signed a 12-year lease for an additional 8-year period on or before January 1, 2022. i this…
Brooks Company leases a machine from TCS Company on 1/1/23. Given: $100,000 $85,000 $20,711 $5,000 $8,000 4% Asset FMV Asset Book Value January 1 payments Guaranteed Salvage Value Lessee expected salvage value Implicit and incremental rates Five-year lease; five-year asset Determine the TCS Lease Receivable at 12/31/23. Select one: a. $79,289 O b. $76,117 c. $76,819 d. $82,461 e. $74,289
ownership of the leased asset will be transferred to Bart. Equal (AICPA) Winn Co. manufactures equipment that is sold or leased. On December 31, 20x6, Winn leased equipment to Bart for a five- Ownership of the leased asset will be transferred to Bart Fqual payment for non-lease components of the contract) and are due on December 31 of each year. The first payment was made on December 31, 20x6. Collectability of the remaining lease payments is reasonably assured, and Winn has no material cost uncertainties. The normal sales price of the equipment is P77,000, and the cost is P60,000. For the year ended December 31, 20x6, what amount of income should Winn realize from the lease transaction? a. 17,000 b. 22,000 с. 23,000 d. 33,000
At the start of the current year, Grace Company sold a building andimmediately leased it back, The following data pertain to the sale andleaseback transaction: Sale price at above fair value P9M; FV of the buildingis P8M, with carrying amount of P7,200,000 and annual rental payable atthe end of each year at P600,000. The remaining life of the building is 20years and the lease term is 4 years. The implicit interest rate is 12%. PV of anordinary annuity of 1 at 12% for 4 years is 3.037. 1. What is the initial lease liability? 2. What is the cost of the right of use asset? 3. What is the gain on right transferred to buyer-lessor? and what is the annual rental income of buyer-lessor?
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $123,288. (FV of $1. PV of $1. FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis. Complete this question by entering your answers in the tabs below. Amort Schedule 01/01/2021 04/01/2021 07/01/2021 10/01/2021 Prepare a lease amortization schedule for the term of the lease for Manufacturers Southern. (Round your intermediate…
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $112,080. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) 2 years (8 quarterly periods) $15,000 at the beginning of each period 2 years $112,080 88 Required: Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the beginning of the lease through January 1, 2022. Edison's fiscal year ends December 31. Complete this question by entering your answers in the tabs below. Amort Schedule General Journal Prepare a lease amortization schedule for Edison Leasing from the beginning of the lease through January 1, 2022. Edison's fiscal year ends December 31.…
The following facts pertain to a non-cancelable lease agreement between Wildhorse Leasing Company and Windsor Company, a lessee. Commencement date June 1, 2025 Annual lease payment beginning with June 1, 2025 $19,998.50 Bargain purchase option price at end of lease term $7,000.00 Lease term Economic life of leased equipment (no salvage value) Lessor's cost Fair value of asset at June 1, 2025 4 years 12 years $56,000 $78,999 Lessor's implicit rate (known to lessee) 6% Lessee's incremental borrowing rate 69 The collectibility of the lease payments by Wildhorse is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) (b) (c) Your answer is partially correct. Prepare a lease amortization schedule for Windsor for the 4-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) WINDSOR COMPANY (Lessee) Date 6/1/25 $ 6/1/25 6/1/26 6/1/27 6/1/28 5/31/29 Annual Lease Payment Plus BPO $ Lease…
On January 1. 2022, XYZ Lessee leased equipment from Standey Inc. Lessor, signing an Operating Lease with the folowing terms - Both the cost and the fair value of the asset for Stanley Inc. Lessor is $360,000 • Lease specifies 4 annual payments of S60,273 beginning January 1. 2022. and on each January 1 thereater trough 202s. The 4year tarm ends on December 31. 2026 - The asset's expected residual value at the end of the lease term (4 years) is $175,000, unguaranteed by the Lessee The expected useful life of the equipment is 7 years, and there is no expected residual value at the end of its useful ife There is no purchase option, and the equipment reverts back to the Lessor at the end of the 4-year period The implicit rate on the lease is 6%, and XYZ Lessee is aware of that rate. Assume Straight Line Depreciation is used on the Right of Use Asset. Present Value factors are the folowing PV of $1 79209 66506 PV of Annuity Due 3.67301 5.91732 n=7 6% Ar December 31. 2022. end of the first…
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2018 International Machines manufactured the equipment at a cost of $101,000. Manufacturers Southern's fiscal year ends December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Ouarterly rental payments Economic life of asset Fair value of asset Implicit interest rate 2 years (8 quarterly periods) $18,000 at the beginning of each period 2 years $132,289 10% Required: 1. Show how International Machines determined the $18,000 quarterly lease payments. 2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2018, and the second lease payment on April 1, 2018 Complete this question by entering your answers in the tabs below Required 1 Required 2 Show how International Machines determined the $18,000 quarterly lease payments.…
*see attached Determine the (a) initial lease liability and (b) initial cost of the right-of-use asset, if the first lease payment was made at the start of the lease and at the beginning of each year for the next four years and there was no transfer of title nor purchase optiona. (a) P 4,126,000 and (b) P 4,726,000b. (a) P 4,726,000 and (b) P 4,126,000c. (a) P 4,310,000 and (b) P 4,910,000d. (a) P 4,910,000 and (b) P 4,310,000