Create bings amortization schedule for lease terms

Assignment Help Financial Accounting

Reference no: EM1376743

Bing Leasing, Inc. agrees to lease equipment to Boyd, Inc. on 1^st January, 2012. They agree on the subsequent terms.

1) The normal selling price of equipment is $300,000 and cost of the asset to Bing Leasing, Inc. was $250,000.
2) The lease is no cancelable with no renewal option. The lease term is 10 years (the similar as the estimated economic life).
3) The lease starts on January 1, 2012 and payments will be in equivalent annual installments.
4) At end of the lease, the equipment will revert to Bing Leasing, Inc. and have an unguaranteed residual value of $30,000. Their implicit interest rate is 10 percent.
5) Boyd will pay all maintenance, insurance, and tax costs straight and annual payments of $32,000 on January 1 of every year.
6) Bing Leasing, Inc. incurred costs of $2,000 in closing and negotiating the lease. There are no uncertainties regarding additional costs yet to be incurred and collectability of the lease payments is reasonably predictable.

Required:

a) Evaluate what type of lease this would be for the lessor and evaluate the following.
Lease Receivable
Sales Price
Cost of Sales

b) Create Bing's amortization schedule for lease terms.

c) Create all journal entries for Kingdom for 2012. Suppose a calendar year fiscal year.

Reference no: EM1376743

Questions Cloud

Evaluate dollar cost of each of proposed plans : Evaluate the dollar cost of each of proposed plans for obtaining an initial loan amount of $100,000 and which plan do you recommend? Why?

Virtual teams and face to face teams : Discuss similarities and differences between virtual teams and face to face teams by planning the advantages and disadvantages of each.

Why might an organization which plans to implement : Why might an organization which plans to implement multicultural teams want to provide encouragement also support diverse employee network groups.

Illustrate what can a manager learn from characteristics : Illustrate what can a manager learn from characteristics also activities of this particular team. Elucidate how might factors which contribute to this team's success be adopted in a business setting.

Create bings amortization schedule for lease terms : Create Bing's amortization schedule for lease terms and create all journal entries for Kingdom for 2012. Suppose a calendar year fiscal year.

Find the average utilization of the refurbishing machine : The Jackson Machine Corporation has 4-cutting tools that require to be refurbished after an average of 30 hours, according to an exponential distribution.

Identification of changes which need to be made : Identification of changes which need to be made also a reason for change. Identification also description of human implications, potential resistance factors,

Explain china''s unethical practices please respond : Explain China's Unethical Practices Please respond to the subsequent and China has been known to disrupt the intellectual property rights related to technology

What present value concept is appropriate for situation : The contract required 5 equal annual payments with the first payment due on 1 st December, 2012, the date of the sale. Find what present value concept is appropriate for this situation?

User Account

All Pages