User Account

All Pages

Describe the nature of the lease for the lessee

Assignment Help Accounting Basics
Reference no: EM132465532

Problem - ABC Corporation entered into a lease agreement on January 1, 2019, to provide CM Company with a piece of machinery. The terms of the lease agreement were as follows.

1. The lease is to be for 3 years with rental payments of $10,000 to be made at the end of each year.

2. The machinery has a fair value of $50,000, and an economic life of 6 years.

3. At the end of the lease term, both parties expect the machinery to have a residual value of $30,000, none of which is guaranteed.

4. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature.

5. The implicit interest rate is 10%.

6. Collectability of the payments is probable.

Required -

a. Evaluate the criteria for classification of the lease and describe the nature of the lease for the lessee (CM Company).

b. Prepare the journal entries for CM Company for year 2019.

Reference no: EM132465532

Questions Cloud

Critically evaluate economic principles : Develop and apply a conceptual understanding of reflective practice in a business context and Critically evaluate economic principles and stakeholders.
Determine when the social security surplus expires : When the social security surplus expires ,Does the social security benefits will have to prepare for the funds to run out? why or why not?
What value do profitability ratios bring to stakeholders : What value do profitability ratios bring to stakeholders? What are some of the ratios included in that category?
Present value of the depreciation tax shield associated : Your firm is considering a project that would require purchasing $7.7 million worth of new equipment. Determine the present value of the depreciation tax shield
Describe the nature of the lease for the lessee : Evaluate the criteria for classification of the lease and describe the nature of the lease for the lessee (CM Company). Prepare journal entries for CM Company
What is the npv of the replacement project : What is the NPV of the replacement project? (Do not round intermediate calculations. Enter the NPV in millions rounded to 2 decimal places.)
Guide employee behavior within the company : Ethical behavior is very important to the success of a business. Over the years, many businesses in your community have suffered the negative publicity
Journalize Balboa entries for the purchase : Journalize Balboa Co. '5 entries for (a) the purchase, (b) the return of the merchandise for credit, and (c) the payment of the invoice
Journalize the necessary year-end adjusting entries : Journalize the necessary year-end adjusting entries based on the account balances before adjustments.The inventory of supplies on hand at December 31, 20

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determine total payroll tax expense for baltimore company

Baltimore will withhold $220 federal income taxes. Use this information to determine the total payroll tax expense for Baltimore Company

  In the month of march new day spa services 636 clients at

in the month of march new day spa services 636 clients at an average price of 240. during the month fixed costs were

  What is the total expected production cost for the month

If 22,000 units are produced in January 2008, what is the total expected production cost for the month

  Write notes on money centre versus superregional banks

Write notes on Money Centre Versus Superregional Banks and Corporate Versus Consumer Banks. Financial Instruments of market risks are evaluated net. Explain

  Example of earnings management

Explain how the Kellogg transactions described could be interpreted as an example of earnings management.

  If the load factor could be increased to 75 percent how

springfield express is a luxury passenger carrier in texas. all seats are first class and the following data are

  Calculating the weighted average cost of capital

Demonstrate your understanding of financial concepts by completing the following problems. Where appropriate, show or explain your work.

  What is the benefit of staggering the election

What's the benefit of staggering the election of board of directors?

  Entry to record the asset retirement obligation

Calaf estimates it will cost $1,000,000 to dismantle and remove the platform at the end of its useful life in 10 years. (The fair value at January 1, 2015, of the dismantle and removal costs is $450,000.) Prepare the entry to record the asset reti..

  Discuss restricted stock to its ceo

Ogden Company issues 1,000 shares of restricted stock to its CEO, Christie DeGeorge

  Current month financial statements

At the end of the current month, Gil Frank prepared a trial balance for College App Services. The credit side of the trial balance exceeds the debit side by a significant amount.

  Beverly hills started a paper route on january 1 2004 every

beverly hills started a paper route on january 1 2004. every three months she deposits 650 in her bank account which

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd