74. On December 31, 2025, Kuhn Corporation leased a plane from Bell Company for a seven-year period expiring December 31, 2032. Equal annual payments of $450,000 are due on December 31 of each year, beginning with December 31, 2025. The lease is properly classified as a finance lease on Kuhn's books. The present value at December 31, 2025 of the eight lease payments over the lease term discounted at 10% is $2,640,789. Assuming the first payment is made on time, the amount that should be reported by Kuhn Corporation as the lease liability on its December 31, 2025 balance sheet is
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- 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 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.
- On December 31, 2023, SW Airlines leased a plane from FIY Company for a ten-yerr period expiring December 30, 2033. Equal annual payments of $637,500 are due on December 31 of each year, beginning with December 31, 2023. The lease is properly classified as a finantics lease on SW's books. The present value at December 31, 2023 of the ten lease payments over the lease term discounted at 9% is $4,459, 472. Assuming the payments are made on time, the amount that should be reported by SW Airlines as the lease liability on its December 31, 2024 balance sheet latter the payment was made) is (rounded): $4,223,324 $3.477,994 $ 3,528.49 $3.821,972On December 31, 2021, Carla Vista Corporation leased a plane from Bell Company for an 7-year period expiring December 31, 2028. Equal annual payments of $445000 are due on December 31 of each year, beginning with December 31, 2021. The lease is properly classified as a finance lease on Carla Vista’s books. The present value at December 31, 2021 of the 8 lease payments over the lease term discounted at 10% is $2611446. Assuming the first payment is made on time, the amount that should be reported by Carla Vista Corporation as the lease liability on its December 31, 2021 balance sheet is $2427591. $2383091. $2166446. $2611446.On December 31, 2021, Lang Corporation leased a ship from Fort Company for an eight-year period expiring December 30, 2029. Equal annual payments of $100,000 are due on December 31 of each year, beginning with December 31, 2021. The lease is properly classified as a finance lease on Lang 's books. The present value at December 31, 2021 of the eight lease payments over the lease term discounted at 10% is $586,843. Required: Prepare the journal entry that Lang should record on December 31, 2021.
- On January 1, 2018, Kuhn Corporation leased a plane from Bell Company for an eight-year period expiring January 1, 2026. Equal annual payments of $450,000 are due on January 1 of each year, beginning with January 1, 2018. The lease is properly classified as a finance lease on Kuhn’s books. The present value at January 1, 2018 of the eight lease payments over the lease term discounted at 10% is $2,640,789. The lease has a guaranteed residual value of $50,000, however the lessee expects the residual value to be only $25,000. Assuming the first payment is made on time, the amount that should be reported by Kuhn Corporation as the lease liability on its December 31, 2018 balance sheet is...On December 31, 2019, an entity leased two automobiles for executive use. The lease required the entity to make five annual payments of P1,500,000 beginning December 31, 2019. At the end of the lease term, December 31, 2024, the entity had a residual value guarantee of the automobiles at P1,000,000. The interest rate implicit in the lease is 10% and present value factors at 10% for 5 periods are 4.17 for an annuity due, 3.79 for an ordinary annuity and 0.62 for present value of 1. What is the lease liability on December 31, 2020? What is the current portion of the lease liability on December 31, 2020? What is the interest expense for 2020?On January 1, 2021, Lang Corporation leased a ship from Fort Company for an eight- year period expiring December 30, 2029. Equal annual payments of $500,000 are due on January 1 of each year, beginning with January 1, 2021. The lease is properly classified as a finance lease on Lang 's books. The present value on January 1, 2021 of the eight lease payments over the lease term discounted at 10% is $2,934,213. Assuming all payments are made on time, the amount that should be reported by Lang Corporation as the interest expense for this lease for 2021 was О a) $500,000. b) $217,763. c) $293,421. d) $243,421.
- 19 On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $125,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,214,031 lease liability. Determine the interest rate implicit in the lease agreement. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $530,203 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is 12%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3.49 million. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Determine the present value of the lease payments on June 30, 2024 that Georgia-Atlantic uses to record the right-of-use asset and lease liability. 2. What amount related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2024 (ignore taxes)? 3. What amount related to the lease would…Pye Company leased equipment to the Polan Company on July 1,2025 , for a ten-year period expiring June 30,2036 . Equal annual payments under the lease are$240,000and are due on July 1 of each year. The first payment was made on July 1, 2025. The rate of interest contemplated by Pye and Polan is9%. The lease receivable before the first payment is$1,680,000and the cost of the equipment on Pye's accounting records was$1,488,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Pye, what is the amount of profit on the sale and the interest revenue that Pye would record for the year ended December31,2025?