Reference no: EM133021024
Question - Manufacturer lessor - James Ltd manufactures specialised Machinery for both sale and lease. On 1 July 2020, James Ltd leased one of these Machinery to Freddy Ltd, incurring $1200 in costs to and execute the lease document. Freddy Ltd incurred $650 in costs to negotiate the agreement. The Machinery being leased cost James Ltd $55 072 to manufacture. The Machinery is expected to have an economic life of 6 years, after which time it will have a residual value of $950. The lease agreement details are as follows.
Length of lease 5 years
Commencement date 1 July 2020
Annual lease payment, payable 30 June each year commencing 30 June 2021 $16,000
Residual value at the end of the lease term, fully guaranteed by Freddy Ltd $8,000
Interest rate implicit in the lease 8%
All insurance and maintenance costs are paid by James Ltd and amount to $3,000 per year and will be reimbursed by Freddy Ltd by being included in the annual lease payment of $16,000. The Machinery will be depreciated on a straight-line basis. It is expected that Freddy Ltd will return the Machinery to James Ltd at the end of the lease.
Required -
1. Make the journal entries to account for the lease in the books of Freddy Ltd for the year ended 30 June 2021. (Show all the workings and round off to the nearest whole number).
2. Make the journal entries to account for the lease in the books of James Ltd for the year ended 30 June 2021. (Show all the workings and round off to the nearest whole number).
At what amount per unit should product Z be reported
: The estimated cost to complete a unit is $16, and the estimated cost to sell is $26. At what amount per unit should product Z be reported
|
Think about the course-registration process
: You know that organizations adhering to the principles of TQM focus on three tasks: customer satisfaction, employee involvement, and continuous improvement.
|
What the ABC Co should recognize a loss on impairment
: ABC Corporation owns equipment with a book value of $220,000. Under IFRS, what the ABC Co. should recognize a loss on impairment
|
Deliver quality of service expected from operation
: Following a restructure of the Hobart Tourism Agency there is a shortage of staff to deliver the quality of service expected from an operation at this level. As
|
Make the journal entries to account for the lease
: Annual lease payment, payable 30 June each year commencing 30 June 2021 $16,000. Make the journal entries to account for the lease
|
Advantages and disadvantages of the alternative approach
: 1. There are three basic features that should be present in any theoretical framework. Discuss these features. Jesse has undertaken a literature review to devel
|
Organization conducting business ethics
: Our presentation showed a video of TOMS "One for one" as an organization conducting business ethics by providing a free pair of shoes to someone in need for eve
|
Domestic tobacco companies are currently facing lawsuits
: Lawsuits are one type of contingent loss, where the loss is contingent upon an adverse settlement or verdict in the case. Domestic tobacco companies are current
|
What are the total variable costs
: Asco Company has a relevant range of production between 15,000 and 30,000 units. If 18,000 units are produced, what are the total variable costs
|