Prepare a lease amortization schedule, Financial Accounting

Assignment Help:

LessorMfg Corp. is a manufacturer of heavy equipment. On January 1, 2013, LessorMfg Corp. leases equipment to Small Company under a six-year noncancelable lease agreement. The following information about the lease and the equipment is provided:

1. Equal annual payments, that are due on December 31 each year, provide LessorMfg Corp. with an 8% return on net investment.

2. Title to the equipment passes to Small Corp at the end of the lease.

3. The fair value of the equipment is $50,000 on the date the lease was signed. The cost of the equipment to LessorMfgr Corp (the manufacturer). is $45,000. The equipment has an expected useful life of nine years.

4. Collectibility of the lease payments is reasonably predictable and there are no important uncertainties surrounding the amount of costs yet to be incurred by LessorMfg Corp.

Answer each of the following questions separately and in the order presented below. Be sure to label each of your responses to match the number of the question you are answering.

(i) What type of lease is this for the lessor? Discuss.

(ii) Calculate the annual lease payment. (Round to nearest dollar.)

(iii) Prepare a lease amortization schedule for LessorMfg Corp, the lessor, for the first three years.

(iv) Prepare the journal entries for the lessor for 2013 to record the lease agreement, the receipt of cash, and the recognition of income (assume the use of a perpetual inventory method and round all amounts to the nearest dollar). Indicate the dates of your entries. (These entries are for the lessor.) (For credit, you must provide the journal entries, even though you've shown the amortization schedule above.)

 


Related Discussions:- Prepare a lease amortization schedule

What is its future value, An investment will pay $200 at the end of every o...

An investment will pay $200 at the end of every of the next 3 years, $400 at the end of Year 4, $600 at the end of Year 5, and $800 at the end of Year 6. If other investments of eq

Corporate accounting system, 1. This assignment is to be submitted as an in...

1. This assignment is to be submitted as an individual assignment.  2. Marks will be deducted for poor quality presentation. For guidance on the requirements for the presentatio

Sugar and Spice bakery, Perform a business size-up of Sugar and Spice Baker...

Perform a business size-up of Sugar and Spice Bakery. 2. Qualitatively analyze the opportunity of closing the storefront to cater events.

determine the hibor , The following are the three-month HIBOR and three-ye...

The following are the three-month HIBOR and three-year EFN futures prices for September 2010 contracts.   a Determine the HIBOR in three-months for settling the futures

Return on equity, profit margin 2.5%, equity multiplier 2.0,sales $50000, c...

profit margin 2.5%, equity multiplier 2.0,sales $50000, common equity $25000.compute return on common equity.

Bond''s yield to maturity, A 15-year, 14% semiannual coupon bond with a par...

A 15-year, 14% semiannual coupon bond with a par value of $1,000 may be known as in 4 years at a call price of $1,075. The bond sells for $1,050. (Suppose that the bond has just be

List the various methods of determining goodwill, Question 1 Explain the f...

Question 1 Explain the five accounting concepts with an example Separate entity concept Going concern concept Money measurement concept Cost concept Dual aspect

Business start up accounting transactions, Business start up accounting tra...

Business start up accounting transactions: Jane Whitfield, a sole proprietor, established the JW Flower Shop on January 2, 2010. The following transactions have occurred during

Write Your Message!

Captcha
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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd