Saluzzo Company enters into a lease agreement on January 1, 2017, for nonspecialized equipment leased by...

  
 

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Saluzzo Company enters into a lease agreement on January 1, 2017, for nonspecialized equipment leased by Hartford Insurance Company. The following data are relevant to the lease agreement: i (Click the icon to view the details of the lease.) Read the requirements. Contract Element C Equipment Maintenance Requirement a. Indicate the type of lease Saluzzo Company has entered into and what accounting treatment is applicable. Contract Component (Click the icon to view the Begin by selecting the contract component for each element of the contract. Then complete the table to determine the allocation of the total consideration to the equipment and the maintenance. (Round the percentages to the nearest hundredth of a percent, X.XX%. Round all other amounts to the nearest whole dollar.) Future Value of $1 table.) (Click the icon to Standalone Selling Prices Percentage 100.00 (Click the icon to view the Present Value of $1 table.) % % Allocated Consideration More info The term of the lease is 4 years with no renewal or purchase options. Annual lease payments of $145,000 are due on January 1 of each year and include all applicable taxes. The fair value of the equipment on January 1, 2017, and the cost to Hartford is $510,000. The equipment has an economic life of 4 no salvage value. years with Saluzzo depreciates similar machinery that it owns using the straight-line method. The lessee payments to the lessor include a charge for maintenance. The lessor sells a similar maintenance agreement for $18,000 when purchased without a lease contract. The machinery is leased for $126,000 per year, including taxes, when lessees do not accept the maintenance contract. Saluzzo's incremental borrowing rate is 6% per year. The lessee does not know the implicit rate used in the lease computations. Hartford indicates that collection from Saluzzo is reasonably certain. Saluzzo does not make a policy election not to separate the lease and nonlease components. Requirements a. b. C. Indicate the type of lease Saluzzo Company has entered into and what accounting treatment is applicable. Prepare an amortization schedule for the entire lease term. Prepare the journal entries on Saluzzo's books that relate to the lease agreement for the first year of the lease term. Saluzzo Company enters into a lease agreement on January 1, 2017, for nonspecialized equipment leased by Hartford Insurance Company. The following data are relevant to the lease agreement: i (Click the icon to view the details of the lease.) Read the requirements. Contract Element C Equipment Maintenance Requirement a. Indicate the type of lease Saluzzo Company has entered into and what accounting treatment is applicable. Contract Component (Click the icon to view the Begin by selecting the contract component for each element of the contract. Then complete the table to determine the allocation of the total consideration to the equipment and the maintenance. (Round the percentages to the nearest hundredth of a percent, X.XX%. Round all other amounts to the nearest whole dollar.) Future Value of $1 table.) (Click the icon to Standalone Selling Prices Percentage 100.00 (Click the icon to view the Present Value of $1 table.) % % Allocated Consideration More info The term of the lease is 4 years with no renewal or purchase options. Annual lease payments of $145,000 are due on January 1 of each year and include all applicable taxes. The fair value of the equipment on January 1, 2017, and the cost to Hartford is $510,000. The equipment has an economic life of 4 no salvage value. years with Saluzzo depreciates similar machinery that it owns using the straight-line method. The lessee payments to the lessor include a charge for maintenance. The lessor sells a similar maintenance agreement for $18,000 when purchased without a lease contract. The machinery is leased for $126,000 per year, including taxes, when lessees do not accept the maintenance contract. Saluzzo's incremental borrowing rate is 6% per year. The lessee does not know the implicit rate used in the lease computations. Hartford indicates that collection from Saluzzo is reasonably certain. Saluzzo does not make a policy election not to separate the lease and nonlease components. Requirements a. b. C. Indicate the type of lease Saluzzo Company has entered into and what accounting treatment is applicable. Prepare an amortization schedule for the entire lease term. Prepare the journal entries on Saluzzo's books that relate to the lease agreement for the first year of the lease term.

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