4. On January 1, Sepe Vineyard Supply leased a truck for a five-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $11,000 due on December 31 of each year, calculated by the lessor using a 4% discount rate. The lessee interest rate is 5% and the truck economic life is 7 years. What amount, if any, should be recorded as the right-of-use asset (leased asset-truck) and lease liability at the inception under this rental agreement? A) 0 B) $3,000 C) present value of $3,000 D) present value of $11,000
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- Blossom, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $25,000 from Crane Corporation. The agreement stipulates the following. Rental payments of $5,599 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Blossom must reimburse Crane each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $700, though these costs vary from year to year. Blossom must make a payment of $500 with the rental payment each period to cover the insurance Crane has on the warehouse. Blossom paid legal fees of $1,000 in executing the lease. Assuming Blossom's incremental borrowing rate is 6% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Blossom. (List all debit entries before credit entries. Credit account titles are automatically indented when the…On January 1, Year 1, Tucker Company leases equipment from Franz Inc. over three years of the equipment's five-year estimated useful life. Franz acquired the asset for $431,213 and normally utilizes an 8% interest rate for these types of transactions. The present value of the lease payments is $357,710. The annual lease payment is $100,000; the first payment is due on January 1, Year 1. Tucker should recognize the first lease payment byWindsor, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $41,000 from United Corporation. The agreement stipulates the following. . Rental payments of $9,994 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Windsor must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. Windsor must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. Windsor paid legal fees of $2,500 in executing the lease. Assuming Windsor's incremental borrowing rate is 11% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Windsor.
- On January 1, 20X0, an entity leased an equipment for four years at an annual rental of $170,000 payable at the end of each year. The estimated useful life of the equipment is four years. The present value factor of an ordinary annuity of 1 for four years of an implicit rate of 12% is 3.0373. The lease provides for a transfer of ownership of the equipment to the lessee at the end of the lease term. Compute for the depreciation expense for the right of use of asset for the year ended December 31, 20x0.Do the journal entries for the following transactions A lessee enters into a three-year lease and agrees to make the following annual payments at the end of each year: $10,000 in year 1, $15,000 in year 2, and $20,000 in year 3. The initial measurement of the right-of-use (ROU) asset and liability to make lease payments is $38,000 at a discount rate of 8%. At the end of the year, the lessee paid the first installement and recorded the amortisation expense and the interest expense. Amortization expense: $12,667 ($38,000/3) Interest expense: $3,038 ($38,000*.08). Lease liability: ? (You must calculate.)Forrest, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $20,000 from United Corporation. The agreement stipulates the following. Rental payments of $4,638 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Forrest must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $700, though these costs vary from year to year. Forrest must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. Forrest paid legal fees of $1,000 in executing the lease. Assuming Forrest's incremental borrowing rate is 8% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Forrest.
- On January 1, James Industries leased equipment to a customer for a four-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $700,000 and has an expected useful life of six years. Its normal sales price is $700,000. The residual value after four years, guaranteed by the lessee, is $100,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. Collectibility of the remaining lease payments is reasonably assured, and there are no material cost uncertainties. The interest rate is 5%. Calculate the amount of the annual lease payments.Lessee enters into a three year lease of equipment and agrees to make the following annual payments at the end of each year 10,000 in year one, 12,000 in year two and 14,000 in year three. Discount rate is approx. 4, 235% and right of use asset is depreciated on a straight line basis over the lease term. What is the value of the lease liability at the end of years 2 & 3?Saludares Company leased a machinery on January 1, 2021 with the following information: Annual rental payable at the end of each year is P1,000,000. A P300,000 payment is made to the lessor to obtain a long-term lease. At the end of the lease term, dismantling and restoring the machinery is required by contract. The present value of this obligation is P330,000. Annual executory costs paid by the lessee amount to P50,000. Lease term is 4 years and the useful life of the machinery is 8 years. The implicit rate is 10%. The PV of an ordinary annuity of 1 at 10% for 4 periods is 3.17 and the PV of 1 at 10% for 4 periods is 0.68. 1. What is the depreciation for 2021?2. What is the lease liability on December 31, 2021?
- Shamrock, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $40,000 from United Corporation. The agreement stipulates the following. ● Rental payments of $9,435 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. ● Shamrock must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. ● Shamrock must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. ● Shamrock paid legal fees of $3,000 in executing the lease. Assuming Shamrock’s incremental borrowing rate is 9% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Shamrock. (Credit account titles are automatically indented when the amount is…On January 1, Espinoza Moving and Storage leased a truck for a four-year period, at which time possession ofthe truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year,calculated by the lessor using a 5% discount rate. If Espinoza’s revenues exceed a specified amount during thelease term, Espinoza will pay an additional $4,000 lease payment at the end of the lease. Espinoza estimates a60% probability of meeting the target revenue amount. What amount, if any, should be added to the right-of-useasset and lease liability under the contingent rent agreement?Shamrock, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $40,000 from United Corporation. The agreement stipulates the following. ● Rental payments of $9,435 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. ● Shamrock must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. ● Shamrock must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. ● Shamrock paid legal fees of $3,000 in executing the lease. Assuming Shamrock’s incremental borrowing rate is 9% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Shamrock. (Credit account titles are automatically indented when the amount is…