Crane Company leases a new building from Noble Construction, Inc. The present value of the lease payments is $625,000. The lease is a finance lease. Prepare the journal entry that the lessee should make to record this transactions.
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Crane Company leases a new building from Noble Construction, Inc. The present value of the lease payments is $625,000. The lease is a finance lease. Prepare the
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- Larkspur Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Crane Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. Crane has the option to purchase the equipment for $27,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option. 2. The equipment has a cost of $330, 000 and fair value of $368,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $27,000. 3. Larkspur Leasing desires to earn a return of 6% on its investment. 4. Collectibility of the payments by Larkspur Leasing is probable. Prepare the journal entries on the books of Larkspur Leasing to record the payments received under the lease and to recognize income for the years 2025 and 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is…Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Account Titles and Explanation Date 1/1/20 /1/20 2/31/20 /1/21 2/31/21 Lease Receivable Cost of Goods Sold Sales Revenue (To record the lease) Cash Lease Receivable (To record the receipt of lease payment) Lease Receivable Interest Revenue Cash Lease Receivable Lease Receivable Interest Revenue Debit 451,000.00 I Credit 451,000.00Ivanhoe Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Ivanhoe's incremental borrowing rate is 9%. Ivanhoe is unaware of the rate being used by the lessor. At the end of the lease, Ivanhoe has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Ivanhoe uses the straight-line method of depreciation on similar owned equipment. (a) Your answer is correct. Prepare the journal entries, that Ivanhoe should record on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round…
- Crane Leasing Company signs an agreement on January 1, 2025, to lease equipment to Cullumber Company. The following information relates to this agreement. 1. 2. 3. 4. 5. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $230,000. The fair value of the asset at January 1, 2025, is $230,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $24,339, none of which is gu guaranteed. The agreement requires equal annual rental payments, beginning on January 1, 2025. Collectibility of the lease payments by Crane is probable.The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pharoah Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $116,406 Residual value of equipment at end of lease term, guaranteed by the lessee $5000 Expected residual value of equipment at end of lease term $45,000 6 years 6 years Lease term Economic life of leased equipment Fair value of asset at January 1, $642,000 Lessor's implicit rate 6 % Lessee's incremental borrowing rate 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. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, eg 1.25124 and the final answers to O decimal places eg. 5,275.) PHAROAH COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Plus…Whispering Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $54,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%; Whispering's incremental borrowing rate is 8%. Whispering is unaware of the rate being used by the lessor. At the end of the lease, Whispering has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Whispering uses the straight-line method of depreciation on similar owned equipment. Click here to view factor tables.
- Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Wildhorse Storage Company. The following information pertains to this lease agreement. The agreement requires equal rental payments of $68,199 beginning on December 31, 2024. The fair value of the building on December 31, 2024, is $498,399. The building has an estimated economic life of 12 years, a guaranteed residual value of $9,000, and an expected residual value of $4,900. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark. 1. 2. 3. 4. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)1. 2. The lessee makes a lease payment of $75,200 to the lessor for equipment in an operating lease transaction. Wildhorse Company leases equipment from Noble Construction Inc. The present value of the lease payments is $658,000. The lease qualifies as a capital lease.. Prepare the journal entries that the lessee should make to record the above transactions assuming the entities report under ASPE. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles 1. Debit CreditWindsor Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement. 1. 2. 3. 4. 5. Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing entries. (Credit account titles are automatically inden when amount is entered. Do not ind manually. Record journal entries in the order presented in the problem.) Date 20 0 /20 The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $230,000. The fair value of the asset at January 1, 2020, is $230,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $24,339, none of which is…
- Plummer Leasing Company signs a lease agreement on January 1, 2020, to lease warehouse equipment to AmZon Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1. 2. 3. 4. AmZon has the option to purchase the equipment for $20,000 upon termination of the lease. It is not reasonably certain that AmZon will exercise this option. The equipment has a cost of $165,000 and fair value of $190,000 to Plummer Leasing. The useful economic life is 2 years, with a residual value of $20,000. Plummer Leasing desires to earn a return of 6% on its investment. Collectibility of the payments by Plummer Leasing is probable.Prepare all necessary journal entries for Sheridan for 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record the lease) (To record the first lease payment) Debit 110 CreditWildhorse Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $30,384 at the beginning of each year. The first payment is received on January 1, 2020. Wildhorse had purchased the machine during 2019 for $130,000. Collectibility of lease payments by Wildhorse is probable. Wildhorse set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Wildhorse at the termination of the lease.