Norton company leased equipment from factiva leasing Co. On january 1, 2024, in an operating lease. The present value of the lease payments discounts at 5% was $102,000. Six annual lease payments of $20,000 are due beginning january 1, 2024, the beginning of the lease, and at each december 31 thereafter through 2028. The amount right-of - use asset reported on december 31, 2024 balance sheet would be
Q: On December 31, 2023, Ainsworth, Incorporated had 550 million shares of common stock outstanding.…
A: It represents the portion of a company's profit allocated to each outstanding share of common stock.…
Q: Diego Company manufactures one product that is sold for $79 per unit in two geographic regions-the…
A: VARIABLE COSTINGVariable Costing is a Cost Managerial Accounting Method in which all Variable Cost…
Q: Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no…
A: Absorption costing or Full costing refers to a method of costing to account for all the costs of…
Q: Last month when Holiday Creations, Incorporated, sold 44,000 units, total sales were $176,000, total…
A: The contribution margin ratio is a percentage that represents how much of each sales dollar…
Q: Required information [The following information applies to the questions displayed below.]…
A: The term "E&P" refers to the total earnings and profits of the company, which comprises both…
Q: [The following information applies to the questions displayed below.] Oak Mart, a producer of solid…
A: Lets understand the basics.Income statement can be prepared using(1) Variable costing income…
Q: Kirsh Corporation purchased land as a factory site and contracted with Heathercote Construction to…
A: Assets: An asset is a resource which have some future economic benefit that an individual or…
Q: [The following information applies to the questions displayed below.] The following data were…
A: Income statement is a financial statement that shows profitability, total revenue and total…
Q: Required information. [The following information applies to the questions displayed below.] Greer…
A: Payroll tax: A payroll tax is a tax withheld from an employee's salary by an employer who remits it…
Q: Swifty Corporation produces a product that requires 2.60 pounds of materials per unit. The allowance…
A: The objective of the question is to calculate the standard cost per unit for the product produced by…
Q: At the beginning of the year Unique Ltd. had total assets of $623,000 and total liabilities of…
A: To find the change in liabilities, we can rearrange the above equation.Change in liabilities =…
Q: On January 1, 2025, Swifty Company purchased 12% bonds having a maturity value of $312,000 for…
A: Investment means an asset purchased in expectation of earning a return on such investment in future…
Q: The following information pertains to Mason Company for Year 2: Beginning inventory Units purchased…
A: Methods in inventory calculationFIFO- the FIFO or first in first out is a method where the firstly…
Q: Blossom Corporation reported EBITDA of $7,299,875 and net income of $3,789,692.44 last year. The…
A: The regular operations a business engages in to generate income, produce goods or services, and…
Q: Classified Electronics has an unfunded retiree health care plan. Each of the company's three…
A: The expected post-retirement benefit obligation is the discounted present value of an actuarial…
Q: Hakara Company has been using direct labor costs as the basis for assigning overhead to its many…
A: Activity-based costing (ABC) is a costing method that assigns overheads and indirect costs to…
Q: es Nighthawk Steel, a manufacturer of specialized tools, has $5,450,000 in assets. Temporary current…
A: The earnings after taxes is used by the company to determine the actual profitability.Given in the…
Q: Jennie received a 6-month extension (to October 15, 2021) to file her 2020 tax return. Jennie…
A: According to the provisions, Failure-to-pay penalty is 0.5% of the unpaid tax for each month (or…
Q: Gail Cleaners produces a commercial cleaning compound known as Carpex. The direct materials and…
A: The variance analysis refers to the causes of the difference between the budgeted costs and the…
Q: (continuation of 5-31 and 5-32). Timlin has two classifications of professional staff: partners and…
A: The objective of the question is to calculate the costs of the Lopez Enterprises and Clinical Inc.…
Q: The records of Cordova Corp. showed th 1. Inventory 2. Purchase 3. Sale (at $16.80) Purchase 4. Sale…
A: The ending inventory is the amount of inventory in hand at the end of the period. It is reported as…
Q: Whirly Corporation's contribution format income statement for the most recent month is shown below:…
A: MARGINAL COSTING INCOME STATEMENTMarginal Costing Income Statement is One of the Important Cost…
Q: Steven Limited's net income for the year ended December 31, 2023 was $650,250 and there were 92,000…
A: The objective of the question is to calculate the basic earnings per share (EPS) for Steven Limited…
Q: Carla Vista Inc., a registered broker, enters into a finder's fee agreement with Wildhorse Homes…
A: Journal entries are made to record the transactions as the first process in the books of accounts…
Q: Hemming Company reported the following current-year purchases and sales for its only product. Date…
A: Under the FIFO method, the oldest products in inventory are sold first.Under the LIFO method, the…
Q: Bob Jensen Incorporated purchased a $660,000 machine to manufacture specialty taps for electrical…
A: To calculate the accounting (book) rate of return based on the initial investment, we need to find…
Q: Regular Company produces audio equipment, specifically headphones and speakers. A new CEO has just…
A: Manufacturing overhead is the indirect costs that are incurred during the manufacturing process,…
Q: The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets…
A: The objective of the question is to calculate the Return on Investment (ROI) for each of the four…
Q: Electro Company manufactures transmissions for electric cars. Management reports ending finished…
A: Inventory includes all the items, merchandise, and raw materials that are used by the business…
Q: Finch Plastic Products Company makes a plastic toy using two departments: parts and assembly. The…
A: Equivalent units of production (EUP) is a concept used in cost accounting to measure and report the…
Q: The following cost information is available for July for the Crest Plant at Calvert Company.…
A: The equivalent units are calculated on the basis of the percentage of the work completed during the…
Q: Cray Computing needs a 5-month loan for $300,000. Its bank quotes a simple interest rate of 15% on…
A: Effective Annual Rate (EAR)The impact of compounding throughout the year is taken into account by…
Q: Use the following information for the Quick Study below. (Algo) Miami Solar manufactures solar…
A: Direct costs are the expenses that are directly used for the production of goods and services for…
Q: The following summarizes Tesla's merchandising activities for the year. Cost of merchandise sold to…
A: Merchandise purchase , net = Merchandise inventory , gross - Purchase return and allowances -…
Q: Prepare the closing entries for the year ended December 31.
A: Closing entries are required to close the temporary accounts of the company. Those accounts that are…
Q: Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90,…
A: Direct costs are the expenses that are directly used for the production of goods and services for…
Q: suming that the machinery was the only tangible property placed in service during the year, compute…
A: The Modified Accelerated Cost Recovery System (MACRS) is a methodology for tax depreciation in the…
Q: How will IFFA record the May 10 transaction? a. increase Prepaid Advertising and decrease Cash,…
A: Let's go through each transaction step by step:May 10 transaction:This transaction involves…
Q: On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation.…
A: Present value of lease payments = Annual lease payments * PVAD of 1 at I for n periodsPretax amount…
Q: Gunflint Adventures operates an airplane service that takes fishing parties to a remote lake resort…
A: Depreciation :"Depreciation" is defined as an accounting method wherein the cost of tangible assets…
Q: During Heaton Company's first two years of operations, it reported absorption costing net operating…
A: The income statement can be prepared using different methods as variable and absorption costing. The…
Q: Here's the income statement from a small company for Q2 2022 (values in dollars): Q2 2022 Q2 2021…
A: INCOME STATEMENTIncome Statement is one of the Important Financial Statement of the Company. Income…
Q: What is the correct title for this company's single step income statement? a. Talbridge Ltd., Income…
A: The correct title for Talbridge Ltd.'s single step income statement is: e. Talbridge Ltd., December…
Q: Wilson Industries and Cargill Corporation are two similarly sized companies. Wilson is a…
A: A merchandising company buys and sells products without altering their form, acting as a middleman…
Q: In October, Blossom Company reports 22,000 actual direct labor hours, and it incurs $120,000 of…
A: Variances are the differences between the estimated values for the material, labor and overhead and…
Q: Prime Corp. is an accrual basis, calendar year C corporation. Its current year reported book income…
A: The objective of the question is to calculate Prime Corp's current year taxable income as reconciled…
Q: Required: Below is a payroll sheet for Riverbed Imports for the month of September 2025. The company…
A: Payroll register refers to a record of payroll information for each and every employee maintained by…
Q: On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common…
A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…
Q: Dineshbhai
A: The objective of the question is to calculate the operating income that the flexible budget and the…
Q: Required information [The following information applies to the questions displayed below.]…
A: First-in First-Out Method - Under the First-in First-Out Method company uses inventory in the…
Step by step
Solved in 3 steps with 2 images
- Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: The lease is noncancelable and has a term of 8 years. The annual rentals arc 35,000, payable at the beginning of each year. The interest rate implicit in the lease is 14%. Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for 1 at the end of the lease term, December 31, 2026. The cost of the equipment to the lessee is 150,000, and the fair value is approximately 185,100. Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Ballieu estimates that the fair value is expected to be significantly greater than 1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of 35,000 discounted at 14% is 185,090.68 (the 1 purchase option is ignored as immaterial). Required: 1. Next Level Identify the classification of the lease transaction from Ballices point of view. Give the reasons for your classification. 2. Prepare all the journal entries tor Ballieu for the years 2019 and 2020. 3. Discuss the disclosure requirements for the lease transaction in Ballices notes to the financial statements.Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of 20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is 68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Executory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020.
- Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).Lessee Accounting Issues Timmer Company signs a lease agreement dated January 1, 2019, that provides for it to lease equipment from Landau Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: The lease is noncancelable and has a term of 5 years. The annual rentals are 83,222.92, payable at the end of each year, and provide Landau with a 12% annual rate of return on its net investment. Timmer agrees to pay all executory costs directly to a third party on December 1 of each year. In 2019, these were insurance, 3,760; property taxes, 5,440. In 2020: insurance, 3,100; property taxes, 5,330. There is no renewal or bargain purchase option. Timmer estimates that the equipment has a fair value of 300,000, an economic life of 5 years, and a zero residual value. Timmers incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment. Required: 1. Calculate the amount of the asset and liability of Timmer at the inception of the lease. (Round to the nearest dollar.) 2. Prepare a table summarizing the lease payments and interest expense. 3. Prepare journal entries on the books of Timmer for 2019 and 2020. 4. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the present value of next years payment approach to classify the finance lease obligation between current and noncurrent. 5. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the change in present value approach to classify the finance lease obligation between current and noncurrent.Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. Assume that Garvey is required to make payments on December 31 each year.
- Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on the following terms: 1. Twenty-four lease rentals of 2,950 at the beginning of each month are to be paid by Terrell, and the lease is noncancelable. 2. The cost of the heavy equipment to Ramsey was 55,000. 3. Ramsey uses an implicit interest rate of 18% per year and will account for this lease as a sales-type lease. Required: Prepare journal entries for Ramsey (the lessor) to record the lease contract on March 1, 2019, the receipt of the first two lease rentals, and any interest income for March and April 2019. (Round your answers to the nearest dollar.)Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease on January 1, 2019, for nonspecialized equipment that cost the Landlord 280,000 (useful life is 6 years with no residual value). The fair value of the equipment is 300,000. The interest rate implicit in the lease is 14%. The 6-year lease requires 6 equal annual amounts payable each January 1, beginning with January 1, 2019. Tenant pays all executory costs directly to a third party on December 1 of each year. The equipment reverts to the lessor at the termination of the lease. Assume that there are no initial direct costs. Landlord expects to collect all rental payments. Required: 1. Next Level (a) Show how landlord should compute the annual rental amounts, (b) Discuss how the Tenant Company should compute the present value of the lease payments. What additional information would be required to make this computation? 2. Next Level Prepare a table summarizing the lease and interest receipts that would be suitable for Landlord. Under what conditions would this table be suitable for Tenant? 3. Assuming that the table prepared in Requirement 2 is suitable for both the lessee and the lessor, prepare the journal entries for both firms for the years 2019 and 2020. Use the straight-line depreciation method for the leased equipment. The executory costs paid by the lessee are in 2019: insurance, 700 and property taxes, 800; in 2020: insurance, 600 and property taxes, 750. 4. Next Level Show the items and amounts that would be reported on the comparative 2019 and 2020 income statements and ending balance sheets for both the lessor and the lessee, using the change in present value approach.
- Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for Sax. 2. The computers have an estimated life of 5 years, a fair value of 300,000, and a zero estimated residual value. 3. Sax agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. The annual payment is set by Appleton at 83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate. Saxs incremental borrowing rate is 10%. 6. Sax uses the straight-line method to record depreciation on similar equipment. Required: 1. Next Level Examine and evaluate each capitalization criteria and determine what type of lease this is for Sax. 2. Calculate the amount of the asset and liability of Sax at the inception of the lease (round to the nearest dollar). 3. Prepare a table summarizing the lease payments and interest expense. 4. Prepare journal entries for Sax for the years 2019 and 2020.On January 1, 2021, the lessee company signed an operating lease to lease a building from the lessor. The lease arrangement is for 8 years. Lease payments are $168,000 per year and are made at the beginning of the year. The lessee incurred initial direct costs of $65,000. Assume the following is the partial Lease Amortization Schedule (with only two rows and three columns shown) prepared by the lessee company: Date Annual Payment Interest on Liability 1/1/2022 168,000 40,000 1/1/2023 168,000 36,000 In the journal entry made on December 31, 2022, the lessee company should debit/credit Right-of-Use Asset by $___________. (Just enter the amount. Do not put a plus or minus sign in front of the amount.)