La On December 31, 2024, Rhone-Metro Industries leased equipment to Western Soya Company for a four-year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
La On December 31, 2024, Rhone-Metro Industries leased equipment to Western Soya Company for a four-year period ending December 31, 2028, at which time possession of the leased asset will revert back to Rhone-Metro. . The equipment cost Rhone-Metro $644,708 and has an expected useful life of six years. Its normal sales price is $644,708. The lessee-guaranteed residual value on December 31, 2028, is $25,000. Equal payments under the lease are $180,000 and are due on December 31 of each year. The first payment was made on December 31, 2024. Western Soya's incremental borrowing rate is 10%. Western Soya knows the interest rate implicit in the lease payments is 10% Both companies use straight-line depreciation or amortization. Note: Use Excel, or a financial calculator. Required: 1. Show how Rhone-Metro calculated the $180,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Company (the lessee) and (b) by Rhone-Metro Industries (the lessor)? 3. Prepare the appropriate entries for both Western Soya Company and Rhone-Metro on December 31, 2024. 4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor 5. Prepare all appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025 (the second lease payment and amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2028, assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1,000. Complete this question by entering your answers in the tabs below. La On December 31, 2024, Rhone-Metro Industries leased equipment to Western Soya Company for a four-year period ending December 31, 2028, at which time possession of the leased asset will revert back to Rhone-Metro. . The equipment cost Rhone-Metro $644,708 and has an expected useful life of six years. Its normal sales price is $644,708. The lessee-guaranteed residual value on December 31, 2028, is $25,000. Equal payments under the lease are $180,000 and are due on December 31 of each year. The first payment was made on December 31, 2024. Western Soya's incremental borrowing rate is 10%. Western Soya knows the interest rate implicit in the lease payments is 10% Both companies use straight-line depreciation or amortization. Note: Use Excel, or a financial calculator. Required: 1. Show how Rhone-Metro calculated the $180,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Company (the lessee) and (b) by Rhone-Metro Industries (the lessor)? 3. Prepare the appropriate entries for both Western Soya Company and Rhone-Metro on December 31, 2024. 4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor 5. Prepare all appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025 (the second lease payment and amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2028, assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1,000. Complete this question by entering your answers in the tabs below.
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
rn Explain in some detail how the Precision Tree calculations in Figure 6.11 for the Acme problem are exactly the same as those for the hand-drawn decision tree in Figure 6.6. In other words, explain...
-
What are five possible procedures for analyzing a real option? Assume you have just been hired as a financial analyst by Tropical Sweets Inc., a mid-sized California company that specializes in...
-
Olean County uses the following capital projects funds for acquisition or construction of capital facilities: Total balances for governmental, enterprise, internal service, and fiduciary funds are:...
-
Sea Explor manufactures deep-sea diving suits. The company records manufacturing costs by job number and uses a factory overhead applied rate to charge overhead costs to its products. Sea Explor...
-
The following activities occur at Greenwich Corporation, a company that manufactures a variety of products. a. Various individuals manage the parts inventories. b. A clerk in the factory issues...
-
4 ints eBook Hot Print ferences Zachary Company is considering investing in two new vans that are expected to generate combined cash inflows of $29,000 per year The vans combined purchase price is...
-
Insider trading does not offer any advantages if the financial markets are: [A] inefficient. [B] semiweak form efficient. [C] strong form efficient.
-
A small factory has only 3 work stations in a line layout according to the process A B C. Capacity and OEE on these work stations are in the table below. The factory is operated 7 hours per day, 5...
-
Contrast two or three key economic factors for each country with the U.S. economy, and comment. For example, if per capita GDP is significantly lower in the selected countries than in the United...
-
6. Explain the term parameter. Write some code that demonstrates a simple of use of a parameter. You should show a procedure or function that uses a parameter, and how you would call that procedure...
-
After taking the first part of this financial accounting course, you excitedly tell your friend Jordan what you have learned. You tell him about assets, liabilities and net worth and how they...
-
Suppose that the strategic form of this game is represented by the following matrix: Country 1 Country 2 A T P A 4,-3 2,-4 6,-5 T -1,0 3,1 3,-3 P -3,4 -1,3 2,2
-
At the close yesterday IBM was down $2.64 per share from the day before. Also, at the close an IBM 138 call was priced yesterday at $ .98 bid, $1.01 ask, with a delta of .36. This morning, IBM was up...
-
(a) What is the focal length of a magnifying glass that gives an angular magnification of 8.0 when the image is at infinity? (b) How far must the object be from the lens?
-
The President of Musicland has asked for help to evaluate the company's performance during the current year. In particular, we are requested to calculate Musicland's gross profit and its return on...
-
The Counter Company just completed the year-end physical count of its inventory. The total value of inventory was determined to be \($300,000\). The following additional information came to light...
-
Williams Distributing Company is a merchandising company. Williams uses the perpetual inventory system. eames, Record each of the following transactions related to the companys purchasing and selling...
Study smarter with the SolutionInn App