Needed: 1. Determine the total financial income that will be recognised over the lease period. 2. Calculate the new implicit rate that will be utilised in the interest income calculation. 3. Prepare
Q: What challenges does functional diversity represent for the business environment?
A: Introduction: A business environment is a confluence of internal and external elements and forces…
Q: mr saeed started his business with cash Rs 130,000 Furniture rs 40000 and Building Rs 2,00,000 on…
A: Introduction: Transactions are recorded in a journal, are said to be the original journal, and are…
Q: Oak Co currently manufactures and sells four products but is considering whether to buy in some of…
A:
Q: IFRS11-1 On May 10, Romano Corporation issues 1,000 shares of $10 par value ordinary shares for cash…
A: A record is often kept in the accounting records, but it can also be kept in a single account,…
Q: A Net income? Units sold 8700 games units Selling price per unit = $ 69 Variable expenses = $ 49…
A: Fixed costs are costs which do not change with change in activity level. Variable costs are costs…
Q: 10 March Olga withdrew cash, $300 15 March Purchased goods on credit, $200 31 March Received cash…
A: Journal Entry are as follows
Q: atistics show that a certain district has been experiencing high death rates lately, mainly due to…
A: Hospital : It is the place where every citizen of the country protect their life from various…
Q: Amber gears sells gears to HTC Car Repair during 2018.It offers rebates of 2% on purchases up to…
A: Normal purchase made in parts during the year= $300,000 Purchases on March 25, 2018= $74,000 of…
Q: a. Issued 1,000 shares of $10 par common stock at $59 for cash. b. Issued 1,400 shares of $10 par…
A: Introduction: Journals: All the business transactions are to be recorded in Journals. Journals are…
Q: ge benefits (vehicles) worth 100,000 (ownership transferred to X); 13th month pay of 100,000; rice…
A: Fringe Benefit: An extra befits given by the company to its employees money wages or salary e.g.…
Q: What is the due date for submitting Form 1096? Answer: A. 12/31 of the current year B.…
A: A state is a credit reduction state if it takes loan from federal government to meet its states'…
Q: Pier Exports purchased equipment on January 1, 2018, at a cost of $600,000. The company estimates…
A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets. The…
Q: Q.1 Company offered 10,000 ordinary shares of Rs. 10 at Rs. 12. Company received 8,000 shares…
A: Introduction: Journals: All the business transactions are to be recorded in Journals. Journals also…
Q: iarism please Q1. Limited liability is a we
A: Partnership refers to the legal form of agreement between two or more persons who decide to run the…
Q: Identify, by clicking on the relevant boxes in the table below, whether each statement made about…
A: Variance analysis is primarily used by the managers for comparison of actual results with the…
Q: Numble leathers and tanners uses SLM for property, plant and equipment which consisted of the…
A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…
Q: decides which of three mutually exclusive products to make in its roducts is shown in the following…
A: Throughput return ratio refers to the form of ratio which reflects the comparison between the actual…
Q: Explain how an entity would initially and subsequently measure its right-of-use asset and lease…
A: Lease Liability: Initial measurement: The Lease Liability is initially measured at the present…
Q: For a decedent who has left a last will and testament, which of the following correctly state issues…
A: Charitable deduction refers to the form of deductions allowed to a taxpayer on the gifts or cash or…
Q: Complete the reconciliation for the property, plant and equipment note for Retriever Ltd at 31…
A: Re-measurement is an act which is made by the company in order to revalue or re-measure the carrying…
Q: At their request, a few members are furnished prenumbered predated envelopes in which to insert…
A: Internal controls are indeed the processes, rules, and procedures put in place by a corporation to…
Q: Equivalent units of production based on weighted-average are: 100,000 units material, 90,000 units…
A: The equivalent units are calculated on the basis of percentage of the work completed during the…
Q: 37)At Dec 31, Michael Corp has the following bank information: Cash balance per bank $4,500…
A: The bank reconciliation statement is prepared to equate the balances of cash book and passbook with…
Q: Production department records show the following: beginning work in process of 20,000 units (80%…
A: Here company using weighted average method to calculate the equivalent unit of production for the…
Q: costs totaled 30,000 FOB Shipping point. The company returned 10,000 amount of merchandise and…
A: Cost of inventory includes the following: • Purchase cost • Conversion cost • All other cost…
Q: Pratt Corp. started the Year 2 accounting period with total assets of $30,000 cash, $12,000 of…
A: Income statement: The income statement shows the company's revenues and expenses earned during the…
Q: ILLUSTRATE THE VARIOUS COST CLASSIFICATIONS. (PLEASE INCLUDE PHOTOS OR TEXT FOR THE EXPLANATION)…
A: The cost means the amount paid by the company for purchasing or producing something. The cost is the…
Q: under uses the following projected rates to accrue vacation ti Pay Rates Used cation Pay
A: Flounder limited recognizes sick leaves only when it is used . Thus when the sick leaves are used ,…
Q: Production department records show the following: beginning work in process of 25,000 units (100%…
A: Explanation of Concept Process Costing : Process costing is the costing method which is been used to…
Q: what is the first price the company setts the pen lo have marginally profitable? Knowing that
A: The length of time it takes for an investment to generate a profit after the initial outlay of…
Q: An item is originally priced to sell for $85 and is marked down 40%. A customer has a coupon for an…
A: Introduction: If any discount is given on the selling price then new selling price is derived after…
Q: Consider that the exchange rate between the Australian dollar and Japanese yen has changed from ¥78…
A: With the change in exchange rate, the japanese products has become less costly. So it will increase…
Q: ILLUSTRATE THE VARIOUS COST CLASSIFICATIONS. PLEASE INCLUDE PHOTOS OR TEXT FOR THE EXPLANATION)…
A: Cost refers to the monetary value of expenditures for raw materials, equipment, supplies, services,…
Q: Eryn Ltd is a forestry company that owns a plantation forest of silver firs trees. Typically, silver…
A: Earnings before interest and taxes is the net operating income less the operating expenses including…
Q: Problem 14-16 (PHILCPA Adapted) Calapan Company provided the following data: January 1 1,200,000…
A: Accrual Basis- Accrual accounting is founded on the idea of recording transactions as they happen.…
Q: Trented a house this year with the following results: Rent Income $4,000 Utilities $2,500…
A: Any loss incurred by the citizens of the US from the rental property which they have own is allowed…
Q: Q.1 Company offered 10,000 ordinary shares of Rs. 10 at Rs. 12. Company received 8,000 shares…
A: The process of recording business transactions in the books of accounts for the first time is…
Q: Humanics Ltd is considering a proposed investment to manufacture medical equipment for a large-scale…
A: Initial investment and working capital does not directly effected by tax so on these there is no tax…
Q: 9. Prepare an income statement and a statement of changes in equity for the two months ended…
A: Journal Entries - Journal Entries are the recording of transactions of the organization. It is…
Q: The first cost of a machine is P1,800,000 with a salvage value of P300,000 at the end of its life of…
A: Rate of depreciation under declining balance method = 1useful life ×100 = 15×100 = 20% Sum of useful…
Q: Discuss the various effects of income taxes on the ability to work, save and invest
A: Income Taxes- Individuals, entities/corporations/firms, and entities/corporations/firms are taxed on…
Q: Top-down research is being attempted by a street analyst. He intends to eliminate the stock with the…
A: Top-Down Research: An analysis that is based on complete factors is known as top-down analysis. This…
Q: ILLUSTRATE THE VARIOUS COST CLASSIFICATIONS. (PLEASE INCLUDE PHOTOS OR TEXT FOR THE EXPLANATION)…
A: there are several type of cost that are incurred in the business. production of goods there are…
Q: a bicycle for $2500, plus 13% HST. He arranged to make a payment ars. The store is charging 6%…
A: The loans are paid by equal monthly instalments and these equal monthly instalments carry the…
Q: Units sold = 8700 games units Selling price per unit = $ 69
A: Introduction: Net income: Deduction of all expenses from revenues derives the net income. Net income…
Q: Julie works as at home and is self-employed. She uses 17% of her home as office space. She has the…
A: Home office deduction can be calculated under 2 methods: Actual expense method Simplified method…
Q: 3. On February 3, the company purchased materials amounting to 950,000 on account. Transportation…
A: The inventory can be valued using various methods as Periodic system or perpetual system. Using…
Q: Cash Prepaid Insurance Accounts Receivable Inventory Land Held for Investment Land Buildings Less…
A: Current liabilities means liabilities payable within normal course of business which is usually be…
Q: Journal entry 7 Bought motor vehicle by cheque for RM4,300
A: Introduction: Journals: All the business transactions are to be recorded in Journals. Journals are…
Q: List 6 (SIX) qualitative characteristics of having IFRS
A: IFRS are the International Financial Reporting Standards (IFRS) framed for guiding the accountants.…
Needed:
1. Determine the total financial income that will be recognised over the lease period.
2. Calculate the new implicit rate that will be utilised in the interest income calculation.
3. Prepare
Step by step
Solved in 2 steps
- AEI Company is in the business of leasing new sophisticated equipment. At the beginning of current year, an equipment was delivered to a lessee under a direct financing lease with the following provisions: Cost of equipment 3,390,000 Annual rental payable at the end of year 600,000 Useful life and lease term 10 years Implicit interest rate 12% Present value of an ordinary annuity of 1 at 12% for 10 years 5.650 Present value of an ordinary annuity of 1 at 11% for 10 years 5.889 The entity incurred and paid initial direct costs of P143,400 in negotiating and arranging the lease. The equipment will revert to AEI Company at the end of the lease. Required: 1. Compute the…Aragon Co. leased an equipment to a lessee on January 2, 2010 under a direct financing lease with the following provisions - cost of equipment P1,695,000; Annual rental payable at the end of the year P300,000; Useful life and lease term, 10 years. Aragon Co. incurred and paid P71,700 in negotiation and arranging the lease. The present value of an ordi nary annuity of 1 at 12% for 10 years is 5.650 and the present value of an ordinary annuity of 1 at 11% for 10 years is 5.889. What is the total financial revenue to be recognized over the lease term?At the beginning of current year, Waxxy Company sold a machine and immediately leased back. The following data relate to the sale and leaseback transaction: Sale price at above fair value 6,000,000 Fair value of machine 5,000,000 Carrying amount of machine 4,500,000 Annual rental payable at the end of each year 800,000 Remaining life of machine 10 years Lease term 4 years Implicit interest rate 8% Present value of an ordinary annuity of 1 at 8% for four periods 3.312 There is no transfer of title to the lessee nor…
- ABC Company is engaged in leasing equipment. An equipment was delivered to a lessee on December 31,2019 under a direct financing lease with the following terms and conditions: Cost of the equipment P 5,680,000 Residual value (unguaranteed) 300,000 Useful life and lease term 8 years Implicit interest rate 12% Present value of an annuity due of 1 at 12% for 8 years 5.56 Present value of 1 at 12% for 8 years 0.40 The annual rental is P 1,000,000 payable every December 31. The first payment is made on December 31,2019. The equipment will revert to the lessor upon lease expiration. How much is the interest revenue for the year ended December 31,2020?Autocar Company leased a machine to a lessee on January 2, 2020 under a direct financing lease with the following provisions - cost of machine $3,390,000; Annual rental payable at the end of the year $600,000; Useful life and lease term, 10 years. Autocar Company incurred and paid $143,400 in negotiation and arranging the lease. The present value of an ordinary annuity of 1 at 12% for 10 years is 5,650 and the present value of an ordinary annuity of 1 at 11% for 10 years is 5.889. What is the total financial revenue to be recognized over the lease term?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.
- Iceberg Company is in the business of leasing a new sophisticated equipment. Such an equipment was delivered to a lessee on January 1, 2021 under a direct financing lease. Relevant information regarding the lease follows:Cost of equipment P 3,454,520Annual rental payable at the beginning of each year 600,000Residual value – guaranteed 200,000Initial direct cost paid by Iceberg ?Lease term and useful life 10 yearsImplicit interest rate before considering initial direct costs 12%Implicit interest rate after considering initial direct costs 10%The equipment will revert to Iceberg Company at the end of the lease term. 1. The initial direct costs paid by Iceberg Company is: 2. The interest income to be recognized by Iceberg Company for 2022 is: 3. Iceberg Company’s net lease receivable as of December 31, 2023 is:Kobie Company leased an equipment to a lessee on January 2, 2020 undera direct financing lease with the following provisions - cost of equipmentP3,390,000; Annual rental payable at the end of the year P600,000; Usefullife and lease term, 10 years. Kobie Company incurred and paid P143,400 innegotiation and arranging the lease. The present value of an ordinaryannuity of 1 at 12% for 10 years is 5,650 and the present value of anordinary annuity of 1 at 11% for 10 years is 5.889. What is the total financialrevenue to be recognized over the lease term?Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount should be reported as sales revenue? 7,770,00010,000,0007,200,0007,000,000 What is the interest income for 2023? 932,400864,000840,000880,000
- Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount of cost of goods sold should be reported? 5,430,0006,000,0007,000,0007,200,000Seventeen Company is a dealer in machinery. At the beginning of current year, a machinery was leased to another entity with the following provisions: Annual rental payable at the end of each year Lease term and useful life of machinery Cost of machinery Residual value-unguaranteed Implicit interest rate PV of an ordinary annuity of 1 for 5 periods at 12% PV of 1 for 5 years at 12% 3,000,000 5 years 8,000,000 1,000,000 12% 3.60 0.57 At the end of the 5-year lease term, the machinery will revert to Seventeen. Seventeen incurred initial direct cost of P300,000 in finalizing the lease agreement. 1. What amount should be reported as total unearned interest income? a. 4,630,000 b. 4,200,000 c. 5,200,000 d. 3,630,000 2. What amount should be reported as gross income on sale? a. 7,700,000 b. 3,070,000 c. 2,500,000 d. 3,370,000 3. What amount should be reported as interest income for current year? a. 1,364,400 b. 1,296,000 C 1,800,000 d. 926,000France Company is a dealer in equipment. At the beginning of current year, an equipment was leased to another entity Problem 14-15 (IAA) with the following provisions: Annual rental payable at the end of each year Lease term and useful life of machinery Cost of equipment Residual value-unguaranteed Implicit interest rate PV of an ordinary annuity of 1 at 12% for 5 periods PV of 1 at 12% for 5 periods 1,500,000 5 years 4,000,000 500,000 12% 3.60 0.57 At the end of the lease term the equipment will revert to the lessor. The entity incurred initial direct cost of P200,000 in finalizing the lease agreement. 1. What is the gross investment in the lease? a. 7,500,000 b. 8,000,000 c. 4,000,000 d. 4,500,000 2. What is the net investment in the lease? a. - 5,400,000 b. 5,685,000 c. 4,000,000 d. 3,500,000 3. What interest income should be reported for current year? a. 682,200 b. 648,000 c. 900,000 d. 960,000 4. What amount should be reported as gross profit on sale! a. 1,485,000 b. 1,685,000 c.…