User Account

All Pages

Determine the amount the right-of use asset

Assignment Help Accounting Basics
Reference no: EM132848971

Question - Diaz Creamery, leases its ice cream making equipment from Megan Finance Company under the following lease terms:

The lease term is five years, non-cancellable, and requires equal rental payments of $56,926 due at the beginning of each year starting January 1, 2019.

Upon inception of the lease on January 1, 2019, Megan purchased the equipment at its fair value of $280,000 and immediately transferred it to Diaz Creamery. The equipment has an estimated economic life of five years, the expected payout under the residual value guarantee is $15,000.

The lease contains no renewal options, and the equipment reverts to Megan Finance Company upon termination of the lease.

Diaz's incremental borrowing rate is 3.8%; the rate implicit in the lease is also 5%. The implicit rate in the lease is known by Diaz.

Diaz depreciates similar equipment that it owns on a straight-line basis.

Both companies have December 31 year-ends.

Required -

1. Determine the amount the right-of use asset and lease liability are initially measured at from the perspective of the lessee.

2. Prepare the lessee's amortization schedule for this lease for first three years.

3. Prepare the journal entries on January 1, 2019, December 31, 2019, and January 1, 2020 for the lessee.

Reference no: EM132848971

Questions Cloud

Find and identify the constitutional powers of presidency : Find and Identify the constitutional powers of presidency. Select two examples of the growth of presidential power during the 20th and 21st centuries.
Calculate the direct material price and quantity variances : The workers preparing the soup actually worked 800 hours and they earned $12,160. Calculate the Direct Material Price and Quantity Variances
Describe the success or failures of individuals in society : How would you respond to someone who presents you with the arguments proposed by Social Darwinists, to explain the success or failures.
Case 1-driving speed and miles per gallon : A department of transportation's study on driving speed and miles per gallon for midsize automobiles resulted in the following data:
Determine the amount the right-of use asset : Determine the amount the right-of use asset and lease liability are initially measured at from the perspective of the lessee
What was the impact of the holocaust on jews : What was the impact of the Holocaust on Jews? explain why Jews were persecuted. describe the Jewish experience during the Holocaust
Record the journal entries in AJs books : An original cost of $ 720,000, and accumulated depreciation of $ 345,000. Record the journal entries in AJ's books
How did communicate the severity of the problem : Progressive era, Which social problem was Jacob Riis addressing through his work? How did he communicate the severity of this problem?
What will budgeted retained earnings be on june : If Retained Earnings was budgeted to be $236.000 as of March 31, what will budgeted Retained Earnings be on June 30th

Reviews

Write a Review

Accounting Basics Questions & Answers

  How does lean manufacturing reduces scrap waste and

1.what is lean accounting?2.what are some advantages and disadvantags3.what are some issuess accountants face when

  Information about common stockholders

Common stockholders are most concerned with the spread between the return generated onnew investments and the investors required rate of return

  Identify the value impact from the errors

Identify the $ value impact from the errors below on ending inventory, revenue, net income and ending retained earnings in the current year.

  Identify the trial balance column

enter the amount of the difference between the two trial balance columns (debit and credit) due to the error.

  What will be the effect on the contribution margin

If the fixed costs for a product decrease and the per unit variable costs, decrease, what will be the effect on the contribution margin and the breakeven point

  What is the value of the project

Beta Ltd. Expects to invest in a project with a project life of five years. If the project cost of capital is 10% what is the value of the project

  Prepare a trial balance for january

Jan 11 Bought an automobile for business use. It cost $13000. Jerry paid $3000 cash and signed a note payable for the invoice. Prepare trial Balance for January

  What is cost of goods manufactured for the period

A company has beginning work in process of $94,000. Ending work in process is $80,000. What is cost of goods manufactured for the period

  Prepare the General Journal entries for January

Alaska Corporation purchased, on account, 6,600 pounds of raw materials at $7.50 per pound on January 2, 2019. Prepare the General Journal entries for January

  Three different plans for financing a 5400000 corporation

three different plans for financing a 5400000 corporation are under consideration by its organizers. under each of the

  Find what is amount of total assets at the end of the year

During the year, total liabilities increased $127,000 and owner's equity decreased $96,000. What is the amount of total assets at the end of the year?

  Becker company applies overhead at a rate of 26 per direct

becker company applies overhead at a rate of 26 per direct labor hour. budgeted labor hours were 250000 actual labor

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