Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 20, Problem 14E
Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease of equipment entered into on March 1, 2019. The lease is classified as a sales-type lease by the lessor (Anson Company) and as a finance lease by the lessee (Bullard Company). Assume that the lease payments are nude at the beginning of each month, interest and straight-line
Required:
- 1. Record the lease (including the initial receipt of $2,000) and the receipt of the second and third installments of $2,000 in Anson’s accounts. Carry computations to the nearest dollar.
- 2. Record the lease (including the initial payment of $2,000), the payment of the second and third installments of $2,000, and monthly depreciation in Bullard’s accounts. The lessee records the lease obligation at
net present value . Carry computations to the nearest dollar.
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TOPIC: LEASESa. Compute the Rent Expense reported in Faith Company's profit or loss for the yeaars ended December 31, 2020 and December 31, 2021, assuming that Faith elected to apply for this short-term lease the recognition and measurement exemptions under IFRS 16 Leases.b. Prepare journal entries for years 2020 and 2021 in the books of Faith Company and Love Corporation.
The following facts pertain to a non-cancelable lease agreement between Cullumber Leasing Company and Crane Company, a lessee.
Commencement date
Annual lease payment due at the beginning of
each year, beginning with January 1, 2025
Residual value of equipment at end of lease term,
guaranteed by the lessee
Expected residual value of equipment at end of lease term
Lease term
Economic life of leased equipment
Fair value of asset at January 1, 2025
Lessor's implicit rate
Lessee's incremental borrowing rate
Date
1/1/25
1/1/25
1/1/26
1/1/27
1/1/28
1/1/29
1/1/30
12/31/30
Lease payment
(A)
$97,312
$97,312
$97,312
$97,312
$97,312
$97,312
$5,000
January 1, 2025
$97,312
$24,806
$20,456
$15,845
$10,957
$5,775
$283
$55,000
$50,000
6
6
The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
Table shows the amortization schedule for lessee for the lease term:
$546,000
years
years
6 %
Interest expense
(B = Prev D* 6%)…
The following facts pertain to a non-cancelable lease agreement between Sandhill Leasing Company and Carla Vista Company, a
lessee.
Commencement date
Annual lease payment due at the beginning of
each year, beginning with January 1, 2025
Residual value of equipment at end of lease term,
guaranteed by the lessee
Expected residual value of equipment at end of lease term
Lease term
Economic life of leased equipment
Fair value of asset at January 1, 2025
Lessor's implicit rate
Lessee's incremental borrowing rate
Click here to view factor tables.
(a)
Date
1/1/25
1/1/25
1/1/26
The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
1/1/27
1/1/28
1/1/29
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations
to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.)
1/1/30
12/31/30
$
$
Annual Lease
Payment…
Chapter 20 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 20 - Prob. 1GICh. 20 - List four potential benefits to the lessor of...Ch. 20 - Prob. 3GICh. 20 - What is a substitution right, and when does that...Ch. 20 - Prob. 5GICh. 20 - List the five criteria used to determine if a...Ch. 20 - Prob. 7GICh. 20 - Prob. 8GICh. 20 - Describe briefly the procedures followed by the...Ch. 20 - Owens Company leased equipment for 4 years at...
Ch. 20 - Describe the difference between how a lessee would...Ch. 20 - Prob. 12GICh. 20 - What is the basic difference between the...Ch. 20 - Why are compound interest concepts appropriate and...Ch. 20 - Describe briefly the accounting procedures...Ch. 20 - Prob. 16GICh. 20 - Prob. 17GICh. 20 - Which of the following should be included by the...Ch. 20 - East Company leased a new machine from North...Ch. 20 - Prob. 3MCCh. 20 - Fox Company, a dealer in machinery and equipment,...Ch. 20 - Fox Company, a dealer in machinery and equipment,...Ch. 20 - In the third year of a 6-year finance lease, the...Ch. 20 - Prob. 7MCCh. 20 - At its inception, the lease term of Lease G is 65%...Ch. 20 - Rent received in advance by the lessor for an...Ch. 20 - On August 1, 2019, Kern Company leased a machine...Ch. 20 - Next Level Keller Corporation (the lessee) entered...Ch. 20 - Use the information in RE20-1. Prepare the journal...Ch. 20 - Next Level Garvey Company (the lessee) entered...Ch. 20 - Use the information in RE20-3. Prepare the journal...Ch. 20 - Use the information in RE20-3. Prepare the journal...Ch. 20 - Montevallo Corporation leased equipment from Folio...Ch. 20 - Use the information in RE20-6. However, assume...Ch. 20 - Use the following information to decide whether...Ch. 20 - Use the information in RE20-3. Prepare the journal...Ch. 20 - Determining Type of Lease and Subsequent...Ch. 20 - Lessee Accounting with Payments Made at Beginning...Ch. 20 - Lessee Accounting Issues Sax Company signs a lease...Ch. 20 - Lessee Accounting for Finance Lease On January 1,...Ch. 20 - Prob. 5ECh. 20 - Lessor Accounting Issues Ramsey Company leases...Ch. 20 - Lessor Accounting with Receipts at End of Year...Ch. 20 - Lessor Accounting with Unguaranteed Residual Value...Ch. 20 - Lessor Accounting with Guaranteed Residual Value...Ch. 20 - Determining Type of Lease and Subsequent...Ch. 20 - Guaranteed and Unguaranteed Residual Values...Ch. 20 - Lessor Accounting Issues Rexon Company leases...Ch. 20 - Lessee and Lessor Accounting Issues Diego Leasing...Ch. 20 - Lessee and Lessor Accounting Issues The following...Ch. 20 - Lease Income and Expense Reuben Company retires a...Ch. 20 - Determining Type of Lease and Subsequent...Ch. 20 - Determining Type of Lease and Subsequent...Ch. 20 - Accounting for Leases by Lessee and Lessor Scupper...Ch. 20 - Lessee Accounting Issues Timmer Company signs a...Ch. 20 - Sales-Type Lease with Guaranteed Residual Value...Ch. 20 - Sales-Type Lease with Unguaranteed Residual Value...Ch. 20 - Sales-Type Lease with Receipts at End of Year...Ch. 20 - Initial Direct Costs and Related Issues On January...Ch. 20 - Various Lease Issues for Lessor and Lessee Lessee...Ch. 20 - Prob. 10PCh. 20 - Various Lease Issues Farrington Company leases a...Ch. 20 - Comprehensive Landlord Company and Tenant Company...Ch. 20 - Prob. 1CCh. 20 - Identified Asset A customer enters into a 3-year...Ch. 20 - Prob. 3CCh. 20 - Types of Leases On January 1, Hazard Company, a...Ch. 20 - Initial Direct Costs Efland Company leases...Ch. 20 - Prob. 6C
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