rate is not known by Stora Enso. Instructions a. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2021, 2022, and 2023. Stora Enso's fiscal year-end is December 31. b. Use the same facts as above, except that Stora Enso incurred legal fees of €5,000 resulting from the execution of the lease, and received a lease incentive of C1,000 from Sheffield to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected under this situation?
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Please answer part a, b,c, and show all workings.
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- Assume that on December 31, 2018, Stora Enso (FIN) signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of €71,830 beginning on December 31, 2018. 2. The fair value of the building on December 31, 2018, is €525,176. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of €10,000, and an expected residual value of €7,000. Stora Enso depreciates similar buildings using the straight-line method. 4. The lease is non-renewable. At the termination of the lease, the building reverts to the lessor.5. Stora Enso's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Stora Enso. 1. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2018, 2019, and 2020.…E21.10 (LO 2) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing and Choi Group, a lessee (amounts in thousands). Commencement date Мay 1, 2022 Annual lease payment due at the beginning of each year, beginning with May 1, 2022 ¥20,471.94 Bargain purchase option price at end of lease term ¥4,000.00 Lease term 5 years Economic life of leased equipment 10 years Lessor's cost ¥65,000.00 Fair value of asset at May 1, 2022 ¥91,000.00 Lessor's implicit rate 8% Lessee's incremental borrowing rate 8% The collectibility of the lease payments by Mooney is probable. Instructions (Round all numbers to the nearest yen.) a. Prepare a lease amortization schedule for Choi for the 5-year lease term. b. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2022 and 2023. Choi's annual accounting period ends…P21.1 (LO 2, 4) (Lessee Entries, Finance Lease) The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. January 1, 2020 Commencement date. Annual lease payment due at the beginning of each year, beginning with January 1, 2020 Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate $113,864 $50,000 $45,000 6 years 6 years $600,000 8% 8% The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amorti- zation for all leased equipment. Instructions a. Prepare an amortization schedule that would be suitable for the lessee for the lease term. b. Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and…
- MN.17. On 1 July 2020 Jane Ltd (lessor) leased equipment to Austin Ltd (Lessee). The equipment had a fair value of $369,824. This was also the present value of the lease payments .The lease agreement contained the following details: Lease term 5 years Economic life 6 years Annual rental payment in arrears commencing 30June 2021 $90,000 Residual Value at end of lease term $80,000 Residual Value guaranteed by lessee 80,ooo Interest rate implicit in lease 12% Lease is cancellable with permission of lessor, Jane Ltd .Lease is classified as a finance Lease by the Lessor . Required: (a)Prepare the Lease payment schedule for Austin Ltd, Lessee, for the first two years, for the year ended 30 June 2021 and for the year ended 30 June 2022.11. On 1 July 2020, Sami Ltd leased a machine from Jimmy Ltd. The machine cost Jimmy Ltd OMR1,300,000 to manufacture and had a fair value of OMR1,541,090 on 1 July 2020. The lease agreement contained the following provisions: Lease term |4 years |Annual rental payment, in advance on 1 July each year OMR 415,000| Residual value at end of the lease term Residual guaranteed by lessee Interest rate implicit in lease The lease is cancellable only with the permission of the lessor. OMR 150,000 nil 8% The expected useful life of the machine is 6 years. Sami Ltd intends to return the machine to the lessor at the end of the lease term. Included in the annual rental payment is an amount of OMR15,000 to cover the costs of maintenance and insurance paid for by the lessor. Required A. Prepare the lease payment schedule for the lessee (show all workings); and B. Prepare the lease receipt schedule for the lessor (show all workings)Assume that on December 31, 2019, Telco Company signs a 10-year, non-cancelable lease agreement to lease a storage building from Redfield Storage. The following information pertains to this lease agreement. - The agreement requires equal rental payments of €69,223 beginning on December 31, 2019.- Telco Company incurs initial direct costs of €5,000.- The fair value of the building on December 31, 2019, is €548,990.- The building has an estimated economic life of 12 years, a guaranteed residual value of €16,000, and an expected residual value of €10,000. Telco Company depreciates similar buildings using the straight-line method.- The lease is non-renewable. At the termination of the lease, the building reverts to the lessor.- Telco Company incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Telco Company.Instructions1. Compute the amount of the lease liability and right-of-use asset for Telco Company.2. Prepare the journal entries on the lessee’s books…
- The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Inception date: May 1, 2025 Annual lease payment due at the beginning of each year, beginning with May 1, 2025: $30,000 Bargain-purchase option price at end of lease term = $10,000 Lessor's implicit rate = 7% The lease term ends in FIVE years on April 30, 2030. What is the present value of the asset being leased? Recommendation: draw a timeline of the cash flows from the lessee to the lessor. Your Answer: AnswerThe following facts pertain to a non-cancelable lease agreement between Sheridan Leasing Company and Skysong Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate May 1, 2020 $15,349.90 $6,000 50 10 $65,000 $76,000 4 years years 96 The collectibility of the lease payments by Sheridan is probable. Prepare a lease amortization schedule for Skysong for the 5-year lease termAssume that on December 31, 2019, Kmberly-clark corp. signs a 10-year, non-cancelable lease agreement to lease a storage bullding from Sheffleld Storage Company. The followIng Information pertalns to this lease agreement. 1. The agreement requires equal rental payments of $68,199 beginning on December 31, 2019. The falr value of the bullding on December 31, 2019 Is $498,399. 2. The bullding has an estimated economlc life of 12 years, a guaranteed residual value of $9,00o, and an expected residual value of $4,900. Klmberty-Clark depreclates simllar bulldings on the stralght-line method. The lease Is nonrenewable. At the termination of the lease, the bullding reverts to the lessor. Kimberly-Clark's Incremental bornowing rate Is B% per year. The lessor's Implicit rate Is not known by KImberly-Clark. 3. 4. 5. Click here to view factor tables, (For caleulation parposes, use 5 decimal places as displayed in the factor table provided.) Prepare the journal entries on the lessee's books to…
- 1. Refer to Item 4. At what amount should the lease liability be recognized at January 1, 2022, after making the first payment of P260,000 to the lessor? 2. Assuming that the residual value of the two automobiles amounted to P150,000 at the end of the lease term, prepare the journal entry to record the transfer of the leased automobiles to the lessor.E21.6 (LO 3) (Lessor Entries, Sales-Type Lease with Option to Purchase) Castle Leasing Company signs a lease agreement on January 1, 2022, to lease electronic equipment to Jan Way 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. Jan Way has the option to purchase the equipment for $16,000 upon termination of the lease. It is not reasonably certain that Jan Way will exercise this option. 2. The equipment has a cost of $120,000 and fair value of $160,o00 to Castle Leasing. The useful economic life is 2 years, with a residual value of $16,000. 3. Castle Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Castle Leasing is probable. Instructions a. Prepare the journal entries on the books of Castle Leasing to reflect the payments received under the lease and to recognize income for the years 2022 and 2023. b. Assuming that Jan Way…18. Which of the following lease arrangements would most likely be accounted for as a finance lease by the lessor if it is under US GAAP instead of IFRS? a. The lease agreement runs for 15 years and the economic life of leased property is 20 years. However, the title is not transferred to the lessee at the end of the lease term. b. The present value of future payments is P73,600 when the fair value of the property is P80,000 at the end of the first lease year. c. The lessee shoulders the gain or loss from fluctuation in the fair value of the underlying asset. d. The lessee may renew the two-year lease for two additional years; originally the lease payments were P10,000 monthly. Renewed lease term calls for P11,000 monthly rental payment.