User Account

All Pages

How would the initial measurement of the lease liability

Assignment Help Financial Accounting
Reference no: EM132519252

The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee.

Commencement date
January 1, 2017

Annual lease payment due at the beginning of each year,
beginning with January 1, 2017                                                                         $1 13,864
Residual value of equipment at end of lease term, guaranteed by the lessee                $50,000
Expected residual value of equipment at end of lease term                                        $45,000
Lease term                                                                                                        6 years
Economic life of leased equipment                                                                          6 years
Fair value of asset at January 1, 2017                                                                    $600,000
Lessor's implicit rate                                                                                              8%
Lessee's incremental borrowing rate                                                                            8%

  • The asset will revert to the lessor at the end of the lease term. The lessee uses the straightline amortization for all leased equipment.

Instructions

Question a. Prepare an amortization schedule that would be suitable for the lessee for the lease term.

Question b. Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31.

Question c. Suppose Vance received a lease incentive of £5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? What if Vance prepaid rent of £5,000 to Faldo?

Reference no: EM132519252

Questions Cloud

Construct the market demand and supply curve for labour : Construct the market demand and supply curve for labour, and mark the equilibrium wage and employment.
Managing information systems and technology : A variety of Customer Relationship Management (CRM) systems have integrated social media networks in an effort to be competitive
How digital investigators can enhance professional conduct : What is digital investigator professional conduct and why is it important? Provide examples of how digital investigators can enhance their professional conduct.
Consumers pay in the short run and in the long run : In the long run suppose that it is elastic. What is the impact of a cigarette tax on the price that consumers pay in the short run and in the long run?
How would the initial measurement of the lease liability : How would the initial measurement of the lease liability and right-of-use asset be affected? What if Vance prepaid rent of £5,000 to Faldo?
What kind of speech was first amendment written to protect : What does it mean that laws regulating speech must be content neutral? What kind of speech was the First Amendment written to protect?
Graphically illustrate jack optimal consumption choice : Graphically illustrate Jack's optimal consumption choice. Be sure to show all possible numerical information.
Understanding of organizational policies for compliance : What key role does compliance play for any industry? Explain your understanding of organizational policies for compliance.
Intergalactic business machines and compulsive computers : Intergalactic Business Machines (IBM) and Compulsive Computers (CC) are the only two producers of the new Photon PCs.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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