User Account

All Pages

What type of lease is for FHA

Assignment Help Financial Accounting
Reference no: EM132600143

FHA is a private corporation adhering to ASPE, enters into a non-cancellable lease agreement on July 1, 2017, to lease equipment from EP Ltd. Selected details relevant to the lease agreement are below:

  1. The term of the lease is 4 years, with no renewal option. Payments of $126,807 are due on June 30 of each year, with the first payment due June 30, 2018.
  2. The fair value of the equipment on July 1, 2017 is $420,000. The equipment has an economic life of 6 years with no residual value.
  3. FHA depreciates similar equipment it owns on the straight line basis
  4. FHA's incremental borrowing rate is 10%. The lessee is aware that the lessor used an implicit rate of 8% in calculating the lease payments.
  5. Present value factor for 4 periods at 8% is 3.31213; at 10%, 3.16986.
  6. Maintenance expenses paid separately to EP amount to $3,500 / month paid annual at the beginning of the lease.

Required

Question a) What type of lease this is for FHA? Explain your rationale using all ASPE tests?

Question b) Prepare the journal entries on FHA's books that relate to the lease agreement for the following dates. Round all amounts to the nearest dollar. Show your calculations

i. July 1, 2017

ii. December 31, 2017

Reference no: EM132600143

Questions Cloud

How much is credited to deferred income : The present value of 1 at 10% is .75 for three periods. How much is credited to deferred income upon the receipt of the grant
What is the wavelength of the interfering waves : A string with a length of 0.72 m is fixed at both ends. The string is plucked so that there are 6 nodes along the string, in addition to those at either end.
What distance from the center of the screen : Light with a wavelength of 522 nm (5.22 x 10-7-4 m) is incident upon a double slit with a separation of 0.4 mm (4 x 10 m). A screen is located 2.3 m from the do
What is the impairment loss on building : The entity also determined that the fair value less cost of disposal of the building is P4,500,000. What is the impairment loss on building
What type of lease is for FHA : What type of lease this is for FHA? Explain your rationale using all ASPE tests? The term of the lease is 4 years, with no renewal option.
Describe two optical pumping techniques : Laser Physics Msc. Q: Describe two optical pumping techniques for having maximum efficiency
What is the net effect on the balance sheet as at june : The end of reporting period is 30 June. What is the net effect on the Balance Sheet as at 30 June
What is the magnitude of the force exerted : An electron and a proton have charges of an equal magnitude but opposite sign of 1.6 x 10-19-11 C. If an electron and proton in a hydrogen
Find the gain or loss on the sale without constructing bond : Find the gain or loss on the sale without constructing a bond schedule for six $5000, 9.5% bonds with interest payable semi-annually redeemable

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