What type of lease is this for youngsun kim corporation

Assignment Help Accounting Basics

Reference no: EM132727207

On July 1st, 20X1, the Youngsun Kim Corporation leased equipment to the Huaqiang Huang Corporation. Both the Youngsun Kim and Huaqiang Huang Corporation uses ASPE. The following information pertains to this lease transaction.

The term of the lease is for six years, with no renewal option. The equipment reverts to the lessor at the termination of the lease, at which time it is expected to have a residual value (not guaranteed) of $18,000.
The Corporation amortizes all its equipment on a straight-line basis.
The equipment has an economic life of seven years.
Collectibility of the lease payments is reasonably predictable and there are no important uncertainties about any unreimbursable costs that have not yet been incurred by the lessor.
Equipment rental payments are due on June 30th, of each year, except for the first down payment which is due on July 1st, 20X1.
The Corporation sets the annual rental payment to ensure a 9.0% rate of return. Huaqiang Huang Corporation's incremental borrowing rate is 10.0% and the lessor's implicit rate is unknown to the lessee.
The equipment's fair market value as at July 1st, 20X1 is $432,000 and its cost to the Youngsun Kim is $333,000.
Both corporations use reversing entries.
The year end for Huaqiang Huang Corporation is December 31st.
The year end for Youngsun Kim Corporation is June 30th.

Required:

Problem 1: What type of lease is this for Youngsun Kim Corporation?

Problem 2: What type of lease is this for the Huaqiang Huang Corporation?

Problem 3: Calculate the annual lease payment

Problem 4: Prepare the required Journal entries for 20X1 and 20X2 for the Youngsun Kim Corporation

Problem 5: Prepare the required Journal entries for 20X1 and 20X2 for the Huaqiang Huang Corporation.

Reference no: EM132727207

Questions Cloud

How thee taxable income is determined in the philippines : How the taxable income is determined in the Philippines? Purely business or professional income earner. / Purely compensation earner

Make journal entries to record the revaluation : The carrying amount of the asset will he recovered through use. Make journal entries to record the revaluation and related tax consequences.

Which tax legislation is primarily considered : In the U.S. Congress, tax legislation is primarily considered by which of the following? he House Finance Committee and the Senate Taxation Committee

What other stakeholders are involved in implementing policy : What other stakeholders are involved in implementing policy, strategy, or doctrine that address your topic area(s) - National Security Strategy

What type of lease is this for youngsun kim corporation : Prepare the required Journal entries for 20X1 and 20X2 for the Huaqiang Huang Corporation. What type of lease is this for Youngsun Kim Corporation?

Journalize the withdrawal of irving from the partnership : What are the balances in James' and Love's capital accounts after Irving leaves the partnership? Journalize the withdrawal of Irving from the partnership

Calculate the ending balance of each phone accounts : Calculate the ending balance of each phone accounts after journal entries are posted utility expense $365 accounts payable 3 and 65 hours number

Was it the result of satisficing or intuition : Decision making is the process of identifying and choosing alternative courses of action. While we want to make rational decisions, sometimes we don't-sometimes

Prepare the working paper eliminating entries related : Sketchy Shoes is a subsidiary of Pacific Brands. Prepare the working paper eliminating entries related to these intercompany transactions at December 31, 2017.

User Account

All Pages