User Account

All Pages

Determine the amount of lease payment

Assignment Help Financial Accounting
Reference no: EM132877582

Question - Sarh Pieces Inc. creates aluminum alloy parts for commercial aircraft. In a recent transaction, Sarh leased a high-precision lathe machine from Pranav Revolving Corp. on January 1, 2019. The following information pertains to the leased asset and the lease agreement:

Cost of the lathe to lessor $140,000

Pranav's normal selling price for a lathe $178,268

Useful life 7 years

The estimated value at the end of useful life $8,000

Lease provisions:

Lease term 5 years

Payment frequency

Annual Start date of the lease

January 1 Payment timing December 31

Estimated residual value at the end of the lease (unguaranteed) $20,000

Interest rate implicit in the lease (readily determinable by lessee) 7%

The lathe machine will revert back to the lessor at the end of the lease term, the title does not transfer to the lessee at any time, and there is not a bargain purchase option.

Required -

a. Determine the amount of lease payment that the lessor would require to lease the asset to an outside party.

b. Classify this lease from the perspective of the lessor, Pranav Revolving Corp.

c. Prepare an amortization schedule for the lessor.

d. Prepare the journal entries on January 1, 2019, and December 31, 2019, for the lessor.

Reference no: EM132877582

Questions Cloud

What is meant by the term level of assurance : What is meant by the term level of assurance? How does the level of assurance differ for an audit of historical financial statements
How does the knowledge that consumers consider your product : How does the knowledge that consumers consider your product a fixed cost in their life or a variable cost in their life influence the price you set
Explain what is meant by the Single Audit Act : Explain what is meant by the Single Audit Act. What is its purpose? Explain the role of government auditors in operational auditing
Overview and description of the nominated website : Provide an overview and description of the nominated website - Identify and elaborate the main feature or features of the website
Determine the amount of lease payment : Determine the amount of lease payment that the lessor would require to lease the asset to an outside party
What was the amount of cash payments to stockholders : The board of directors declared cash dividends total $168,000 during the year. What was the amount of cash payments to stockholders
What are the ethical issues involved : Al Hajji, AbdulRazak, controller for Nadec Corporation, is preparing the company's income statement at year-end. What are the ethical issues involved
Prepare cash receipts schedule for Power Ridge Corporation : Experience has shown 25 percent of sales are collected in the month of sale, Prepare cash receipts schedule for Power Ridge Corporation
What are target sales in boxes to generate a tax income : Grampian-pizza Company sells pizza to retailers for TZS 88,000 per box. What are target sales in boxes to generate a before tax income of TZS 52,800,000

Reviews

Write a Review

Financial Accounting Questions & Answers

  Which dividend payments to shareholders are classified as

Which Dividend payments to shareholders are classified as? Cash outflows for financing activities. / Cash outflows for investing activities

  Find what was the spot rate at which pesos were converted

If Beverley sold the pesos to its bank and was credited with $1,795,579.69, what was the spot rate at which the pesos were converted?

  What will the new cost of retained earnings be

If inflation is expected to increase by 0.03 next year, but everything else remains the same, what will the new cost of retained earnings be?

  How much transaction price to allocate to each performance

Ginger Ltd is marketing a 'surfing bundle' in which, for $2200, How much of the transaction price to allocate to each performance obligation

  Prepare journal entry to record bad debt expense

Assume that 1.5% of the company's accounts receivable cannot be collected, prepare journal entry to record bad debt expense at the end of 20X2

  Determine what is the cost of external common? equity

Determine What is the cost of external common? equity. Compute the cost for What is the? firm's after-tax cost of debt on the? bond?

  Define accrued liabilities

What are the major differences between current and long-term liabilities? Which one is more important, why and why not?Define accrued liabilities.

  What is the balance in the lease liability account

The selling price of the equipment is $325,000, and the rate implicit in the lease is 8%, which is known to Silver Point Co. What is the book value of the leased asset at December 31, 2011, and what is the balance in the Lease Liability account?

  Calculate the internal growth rate and sustainable growth

Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean and calculate the ratios for S&S Air that are shown for the industry.

  Implication for the efficiency of the organization

If a new accounting standard impact on profits, should this impact on the value of the firm, and if so, why and will the imposition of a particular accounting method have implication for the efficiency of the organization?

  What is production-related depreciation for the third year

JJ Enterprises recently purchased a machine for $50,000 that it uses 90% in production. Transportation costs to bring the machine to the factory were $2,000. It estimates the machine will be useful for five years and that it will be able to produce 4..

  What is the amount of cash flow from operating activities

Retained earnings and the closing process LO 1-5, 1-6 As of December 31, 2014, Blue Haven Company had total assets of $180,000, total liabilities of $54,000, and common stock of $90,000. Determine the before-closing balance in the Retained Earnings a..

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