Determine the classification of the lease

Assignment Help Financial Accounting

Reference no: EM133344929

Questions: On January 1, 20X4, Masons an equipment manufacturer, entered into a new arrangement, as the lessor, to lease equipment with the following terms:

• An annual lease payment of $80,000 is due at the beginning of each year.

• The lease term is six years.

• At the end of the lease, there is a guaranteed residual value of $25,000.

• The lease has an implied interest rate of 5.4%.

• The equipment has a cost of $345,000, which is included in inventory.

• The selling price of the equipment is $460,000, which represents fair market value.

• The economic useful life of the equipment is eight years.

Required

a) Determine the classification of the lease.

b) help me prepare all the journal entries for 20X4 related to this lease. Note that Masons has a December 31 year end.

Reference no: EM133344929

Questions Cloud

What is positive about the hsms auditing approach : Monitoring and measuring (audits) Based on the scenario only, what is positive about the HSM's auditing approach

How much money was distributed in total for dividends : the preferred shareholders received an $80,000 dividend on their shares, which are cumulative and fully participating. How much money was distributed in total

Set an analysis and improvement plan : Use Y=F(X) approach to set an analysis and improvement plan for these startups. Determine for every X whether it is C or N or X

How much waiting cost can be saved for each commercial plane : If the airport pools the runways (i.e., use both runways to serve both types of planes), how much waiting cost can be saved for each commercial plane and each

Determine the classification of the lease : Determine the classification of the lease. b) help me prepare all the journal entries for 20X4 related to this lease. Note that Masons has a December 31 year

How was staff involved for the purpose of evaluation : What worked well What needs improvement How you have evaluated each policy you have implemented

What assumption about these two demand streams makes this : What assumption about these two demand streams makes this calculation correct? What might cause the impact of the risk pooling to be not as large as suggested b

Describe major benefits of the workers compensation program : Describe the major benefits of the workers' compensation program provided under a workers' compensation policy. Identify three benefits and provide

Calculate the reorder point for the transistors : Delivery from their supplier takes 5 working days. Calculate the reorder point for the transistors.

User Account

All Pages