Ww.230. Waterway Inc. offers boat tours around the City Reservoir. The company has signed a lease for a tour boat with anexpected lifespan of six years, no estimated salvage value, and cost the leasing company $228,000. The terms oflease are as follows:..●The lease term begins on January 1, 2022, and runs for 3 years.The lease requires payments of $52,900 each January 1, starting on January 1, 2022, and each paymentincludes $5,000 for maintenance and insurance costs.At the end of the initial lease term, the lease can be renewed for another two years at Waterway's option foronly $27,000 per year, including $1,800 for maintenance and insurance costs. The normal rental cost of asimilar used boat is $32,100 per year. Waterway expects to renew the lease for the second term.At the end of the lease term, the boat is to be returned to the lessor.The lessor's implied interest rate is 5%, and Waterway uses straight-line depreciation for similar equipment.Waterway's year-end is May 31.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.Assuming that Waterway follows ASPE, identify how Waterway should classify this lease.Lease should be considered aseTextbook and MediaAssuming that Waterway follows IFRS and the leases standard IFRS 16, identify the circumstances under which thelease would result in a right-of use asset capitalized on Waterway's statement of financial position.Leases would most likely be considered as

The practise of recording and disclosing financial transactions associated with leasing agreements…

Assuming that Waterway follows ASPE, identify how Waterway should classify this lease. Lease should be considered as eTextbook and Media D Assuming that Waterway follows IFRS and the leases standard IFRS 16, identify the circumstances under which the lease would result in a right-of use asset capitalized on Waterway's statement of financial position.

Assuming that Waterway follows ASPE, identify how Waterway should classify this lease. Lease should be considered as eTextbook and Media D Assuming that Waterway follows IFRS and the leases standard IFRS 16, identify the circumstances under which the lease would result in a right-of use asset capitalized on Waterway's statement of financial position.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Blossom Manufacturing Ltd. has signed a lease agreement with Crane Leasing Inc. to lease some specialized manufacturing equipment. The terms of the lease are as follows: ⚫ The lease is for 5 years commencing January 1,2023. • ⚫ Blossom must pay Crane $54,114 on January 1 of each year, beginning in 2023. • • Equipment of this type normally has an economic life of 6 years. • Crane has concluded, based on its review of Blossom's financial statements, that there is no unusual credit risk in this • situation. Crane will not incur any further costs with regard to this lease. ⚫ Crane purchases this equipment directly from the manufacturer at a cost of $214,026, and normally sells the equipment for $251,626. • ⚫ Blossom's borrowing rate is 7%. Crane's implied interest rate is 6%, which is known to Blossom at the time of negotiating the lease. • • Blossom uses the straight-line method to depreciate similar equipment. ⚫ Both Blossom and Crane have calendar fiscal years (year end December 31),…
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On January 1, 2025, Windsor Co. leased a building to Wildhorse Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,100,000 (unguaranteed), 2. The leased building has a cost of $3,600,000 and was purchased for cash on January 1, 2025. 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 4. Lease payments are $250,000 per year and are made at the beginning of the year. 5. Wildhorse has an incremental borrowing rate of 9%, and the rate implicit in the lease is unknown to Wildhorse. 6. Both the lessor and the lessee are on a calendar-year basis. Click here to view factor tables. (For caiculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare the journal entries that Windsor should make in 2025. (List oll debit entries before credit entries. Credit account…
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