On January 1, 2020, Tenin company leases a machine through a contract that requires 5 payments of $10,000 on the 1st of each January, beginning on that day. The present value of the payments discounted at 10% is 42,000. The classification of the lease is operational. How much should Tenin company recognize as expense for the year 2020? $10,000 $5,800 $4,200 $3,200
Q: Accounting Garry is a partner in an accounting firm in Sydney. Garry is currently looking at his…
A: Answer: Garry is most likely to provide audit services to which of the above clients? Garry is most…
Q: what is the present value of the capital allowance tax benefits (to the nearest £1,000)
A: Given in the question: Machine Cost £8,00,000 Residual Value £25,000 Total Life in…
Q: Freight-in Purchase returns At cost
A:
Q: Twenty sets of office furniture are purchased with a down payment of Php90,000 and the ce at…
A: The monthly installments carry the payment of principal amount and payment for the interest also but…
Q: differences
A: *Repurchase agreement-repo is type of agreement in which the dealers will purchase the securities at…
Q: A small air conditioning repair and parts supply company employ 25 workmen who perform services…
A: Solution Business risk is the risk by which there is a possibility of commercial business making…
Q: Sheridan Bucket Co., a manufacturer of rain barrels, had the following data for 2021: Sales quantity…
A: Break-even sales is the point of unit sales where the net income is $0. Any sale above break-even…
Q: Please do this and show me how you did it if you can
A:
Q: Suppose that the Reserve Bank "tightens" monetary policy. In what order do events occur when this…
A: Monetary policy is tool is reserve bank which he used to control the supply of money in the market…
Q: Your company has a travel policy that reimburses employees for the "ordinary and necessary" costs of…
A: The question requires to calculate the Business portion of the airfare based in maximum…
Q: Print Item Question Content Area Contribution Margin, Break-Even Sales, Cost-Volume-Profit…
A: Disclaimer : “Since you have posted a question with multiple sub-parts, we will solve the first…
Q: 17) In 2011 Ace Inc. acquired a 100% equity interest in Beauty Co. for cash consideration of…
A: Combining the assets, liabilities, and other financial components of two or more entities into one…
Q: Accounts Payable (A/P) are: Amounts totaling the net worth of a company Amounts paid to owners…
A: Accounts payable refers to the sums owed to suppliers for products or services that were purchased…
Q: $35,770. What liability should Fins report on its balance sheet as of December 31, 2021?
A: Liability that Fins should report on its balance sheet as on December 31,2021
Q: Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out…
A: Dymac Appliances Cost of inventory - FIFO method Model Qty Unit Cost Total Cost A10 4 $ 76 $…
Q: On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of…
A: Book–Tax Difference: Accounting profit, also known as commercial profit, and fiscal profit,…
Q: Switch Manufacturing Co. builds and sells switch harnesses for glove boxes. The sales price and…
A: Sales Mix Break Even Point: This number is determined by taking into account both the requirements…
Q: Beginning inventory, purchases, and sales data for DVD players are as follows: Date Line Item…
A: First in, first out (FIFO) is an asset management and valuation approach in which the assets that…
Q: Required Information [The following information applies to the questions displayed below.] Hult…
A: Effective cost of per carton is the sum total of average price per carton and the expected cost of…
Q: Pratice Problem 3 A company's individual job sheets show these costs for Jobs 298, 299, and 300.…
A: recording of journal entry in above situation are as follows
Q: -excess of par, common X, 8% l-excess of par, preferred 1,000 300 575 amount of dividends to be paid…
A: When the preferred stock is cumulative, the dividend payable if in arrears is payable in the…
Q: For each separate case, record an adjusting entry (if necessary). Lonzo Company receives $4,800…
A: Journal Entry :— It is an act of recording transaction in books of account when transaction is…
Q: Sargent, Inc., sells a single product with a selling price of $120 and variable costs per unit of…
A: Break-Even Point: There are many different aspects of business and finance that make use of a…
Q: Question: Prepare the Journal Entries, General Ledger, Adjusted Trial Balance
A: Journal Entry In order to document a business transaction in the accounting records of the company,…
Q: A/R turnover.
A: Accounts Receivable Turnover is the ratio that defines the relationship between the average accounts…
Q: Ruth formed an equal profit and loss Partnership with Joyce by contributing Land that had an…
A: Fair market value of Ruth's land =$45000 Debt against it = $19000 Cash share = $35,000 Joyse Land =…
Q: Costs to be capitalized in the inventory account include which of the following? a. Cost of the…
A: Introduction:-. Inventory account shown on the balance sheet under current assets section.…
Q: Ries, Bax, and Thomas invested $28,000, $44,000, and $52,000, respectively, in a partnership. During…
A: Lets understand the basics. Partnership is an agreement between two or more person who works…
Q: Required: Prepare a statement to convert variable costing income to absorption costing income for…
A: Introduction:- Under Absorption Costing accumulate all the manufacturing costs into the cost of a…
Q: 1. How much must Ella deposit in a bank that pays 11% compounded quarterly so that she will have…
A: COMPOUND INTEREST Compound interest is the interest calculated on the principal and the interest…
Q: Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on…
A: Profit Margin: The difference between the entire revenue that your company pulls in and the total…
Q: Sheridan Bucket Co., a manufacturer of rain barrels, had the following data for 2021: Sales quantity…
A: A contribution margin is an excess value of sales revenue over the variable cost. It is also an…
Q: On January 1, 2023, Caroline Lampron and Jenni Meno formed a computer sales and service enterprise…
A:
Q: Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each…
A: A bad debt expense is recognized when a receivable is no longer collectable as a consequence of a…
Q: Wildhorse Company has the following information available for September 2022. Unit selling price of…
A: Cost volume profit analysis is a planning procedure used by management to forecast how changes in an…
Q: N8.
A:
Q: Vaughn Company has the following two temporary differences between its income tax expense and income…
A: Balance sheet is the financial statement which is prepared based on the accounting equation. It…
Q: A home improvement firm has quoted a price of $9,800 to fix up Eric's backyard. Five years ago, Eric…
A: Answer : Present value = $7,500 Interest rate = r = 5.25% yearly Time = 5 years Future value =…
Q: Use P6-1A Excel sheet Mitsui corporation is a major distributor of school portables. All sales have…
A: Special Journal is basically a books of Prime entry wherein some specific transactions are recorded…
Q: Marvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent…
A: Activity-based costing refers to the method in which the overheads are assigned to each product or…
Q: What was Vigor’s gross profit for 20X1? Suppose that there are 360 business days in the year. What…
A: “Since you have posted a question with multiple sub-parts, we will solve first three…
Q: Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a…
A: Weighted Average Method :— It is one of the method of inventory valuation in which average cost per…
Q: 1. You want to set aside 5% of your income from your bi-weekly paycheck and watch it grow. If you…
A: Present Value is the value as of today of any future cash flows. Present Value = Future Value / (1 +…
Q: Techno Corporation is currently manufacturing an item at variable costs of $5 per unit. Annual fixed…
A: variable costs are those costs that change with every item. Annual fixed costs are those costs that…
Q: please answer fast What are the three categories of contributions based on donor intent?
A: When accounting for donations we look at the intent of the donor. This is an important criterion…
Q: What are the three categories of contributions based on donor intent? pease answer in detail
A: Donor Intent The goal of a donation is determined by the donor's intent, which includes the intended…
Q: During 2021, its first year of operations, Baginski Steel Corporation reported a net operating loss…
A: Net operating loss is the amount which is resulted when the expenses of an entity are more than its…
Q: Required information Use the following information for the Exercises below. (Algo) [The following…
A: Lets understand the basics. Direct labor rate variance is a variance between the rate at which labor…
Q: A father plans to set aside Php250,000 for his son's college education. If he wishes to have…
A: Future value of a present value is the value of that amount after taking into account the time value…
Q: After reviewing the new activity-based costing system that Nancy Chen has Implemented at IVC's…
A: ABC seems to be a costing approach that identifies activities in an organization and allocates the…
On January 1, 2020, Tenin company leases a machine through a contract that requires 5 payments of $10,000 on the 1st of each January, beginning on that day. The present value of the payments discounted at 10% is 42,000. The classification of the lease is operational. How much should Tenin company recognize as expense for the year 2020?
$10,000
$5,800
$4,200
$3,200
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
- Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for Sax. 2. The computers have an estimated life of 5 years, a fair value of 300,000, and a zero estimated residual value. 3. Sax agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. The annual payment is set by Appleton at 83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate. Saxs incremental borrowing rate is 10%. 6. Sax uses the straight-line method to record depreciation on similar equipment. Required: 1. Next Level Examine and evaluate each capitalization criteria and determine what type of lease this is for Sax. 2. Calculate the amount of the asset and liability of Sax at the inception of the lease (round to the nearest dollar). 3. Prepare a table summarizing the lease payments and interest expense. 4. Prepare journal entries for Sax for the years 2019 and 2020.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.
- Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease on January 1, 2019, for nonspecialized equipment that cost the Landlord 280,000 (useful life is 6 years with no residual value). The fair value of the equipment is 300,000. The interest rate implicit in the lease is 14%. The 6-year lease requires 6 equal annual amounts payable each January 1, beginning with January 1, 2019. Tenant pays all executory costs directly to a third party on December 1 of each year. The equipment reverts to the lessor at the termination of the lease. Assume that there are no initial direct costs. Landlord expects to collect all rental payments. Required: 1. Next Level (a) Show how landlord should compute the annual rental amounts, (b) Discuss how the Tenant Company should compute the present value of the lease payments. What additional information would be required to make this computation? 2. Next Level Prepare a table summarizing the lease and interest receipts that would be suitable for Landlord. Under what conditions would this table be suitable for Tenant? 3. Assuming that the table prepared in Requirement 2 is suitable for both the lessee and the lessor, prepare the journal entries for both firms for the years 2019 and 2020. Use the straight-line depreciation method for the leased equipment. The executory costs paid by the lessee are in 2019: insurance, 700 and property taxes, 800; in 2020: insurance, 600 and property taxes, 750. 4. Next Level Show the items and amounts that would be reported on the comparative 2019 and 2020 income statements and ending balance sheets for both the lessor and the lessee, using the change in present value approach.On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?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 January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.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.On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000