User Account

All Pages

How yuan yuan guo should classify the lease

Assignment Help Financial Accounting
Reference no: EM132571037

On July 1st, 20X4, the Yuan Yuan Guo Corporation, a manufacturer and distributor of DVD recorders, entered a lease with Zhiyin Huang Rental Inc. Yuan Yuan Guo agreed to lease 20 DVDs for a period of six years beginning July 1st, 20X4. Other lease terms as follows:

Annual Lease Payments beginning 01/07/X4 .............. $ 2,003

Manufacturing Cost of each DVD ................................ 300

Normal Selling Price of each DVD .............................. 525

Estimated economic (EUL) for the DVD's ................... 9 years

Implicit rate in the lease (not known by Zhiyin Huang) 10.0 %

Estimated Residual Value of each DVD at the end of the lease term

(not guaranteed by Zhiyin Huang) ............................... $ 80

Zhiyin Huang can borrow at 12.0 percent and agrees to assume full responsibility for all repairs and maintenance of the machines. Zhiyin Huang will return the DVDs to Yuan Yuan Guo. Since Zhiyin Huang is a good credit risk, Yuan Yuan Guo is certain to collect the lease payments and will not incur any additional costs after the date of the lease agreement.

Both Companies follow ASPE

Required:

Question 1. Determine how Yuan Yuan Guo, the lessor, and Zhiyin Huang, the lessee, should classify the lease.

Question 2. Prepare required journal entries for the Lessee on July 1st , 20X4.

Question 3. Prepare the required journal entries for the Lessee on December 31 st , 20X4 (assuming a December 31st Fiscal Year End).

Question 4. Prepare the required journal entries for the Lessee on July 1st , 20X5

Question 5. Prepare the required journal entries for the Lessee on December 31st , 20X5 (assuming a December 31st Fiscal Year End).

Question 6. Assume that when the DVD's are returned to Yuan Yuan Guo at the end of the lease term, the residual value of each DVD is only $70. Prepare the journal entry to record the return of the machines by Zhiyin Huang.

Reference no: EM132571037

Questions Cloud

Factors that prospective companies can be scored against : You have been asked to personally recommend a new benefits company to handle all the company benefits and pension
What elements do you think are most important : Describe the concept of leadership. What elements do you think are most important, and why? Compare the approaches to organizational leadership.
What is Jerry AGI : Jerry owns two passive activities (which are not rental activities) with losses of $50,000 and $30,000. What is Jerry AGI
Explain the description of implications for health practices : Select a person from a cultural group different from your own. You may choose a patient, friend, or work colleague. For the sake of confidentiality.
How yuan yuan guo should classify the lease : Determine how Yuan Yuan Guo, the lessor, and Zhiyin Huang, the lessee, should classify the lease. Prepare required journal entries for the Lessee on July 1st
Learn from the marshmallow challenge : What are the key take aways that you can learn from the marshmallow challenge ?
Prospective payment or retrospective payment : Which do you believe is more effective as a financial plan: prospective payment or retrospective payment?
How many units should Lewis Hats produce in April : Straw costs $0.20 per kilogram and employees of the company are paid $22 per hour. How many units should Lewis Hats produce in April
Brand image and sources of brand equity : How would you characterize Nike's brand image and sources of brand equity?

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