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intermediate accounting
Intermediate Accounting 17th edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel - Solutions
Morgan Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement.1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years.2. The cost of the
Waterworld Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 4 years and requires equal rental payments of $41,933 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the
Whittier Construction Co. had followed the practice of expensing all materials assigned to a construction job without recognizing any salvage inventory. On December 31, 2020, it was determined that salvage inventory should be valued at $52,000. Of this amount, $29,000 arose during the current year.
On January 1, 2020, a machine was purchased for $900,000 by Young Co. The machine is expected to have an 8-year life with no residual value. It is to be depreciated on a straight-line basis. The machine was leased to St. Ledger Inc. for 3 years on January 1, 2020, with annual rent payments of
On January 1, 2020, Perriman Company transferred equipment for cash and leased it back. As seller-lessee, Perriman retained the right to substantially all of the remaining use of the equipment. The term of the lease is 8 years.Instructionsa. What is the major issue related to sale-leaseback
Macinski Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $70,000 and fair value of $95,000. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual
Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $35,004 at the beginning of each year. The first payment is received on January 1, 2020. Crosley had purchased the machine during
The financial statements of M&S are presented in Appendix E. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a. What
George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $299,140, and its unguaranteed residual value at the end of the lease term is estimated to be $20,000.
Use the information for Crosley Company in E21.8. Assume that Dexter Corporation does not know the rate implicit in the lease used by Crosley, and Dexter’s incremental borrowing rate is 8%. In addition, assume that Dexter incurs initial direct costs of $15,000.Crosley Company, a machinery dealer,
Explain the following concepts:(a) Bargain purchase option(b) Bargain renewal option.
The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee.Commencement date
Assume that IBM leased equipment that was carried at a cost of $120,000 to Swander Company. The term of the lease is 6 years beginning December 31, 2019, with equal rental payments of $30,044 beginning December 31, 2019. The fair value of the equipment at commencement of the lease is $150,001. The
Goring Dairy leases its milking equipment from King Finance Company under the following lease terms.1. The lease term is 10 years, non-cancelable, and requires equal rental payments of $30,300 due at the beginning of each year starting January 1, 2020.2. The equipment has a fair value at the
A lease agreement between Mooney Leasing Company and Rode Company is described in E21.10.Instructions Refer to the data in E21.10 and do the following for the lessor. (Round all numbers to the nearest cent.)a. Compute the amount of the lease receivable at commencement of the lease.b. Prepare a
Use the information for IBM from BE21.10. Assume the sales-type lease was recorded at a present value of $150,000. Prepare IBM’s December 31, 2020, entry to record the lease transaction with Swander Company.In BE21.10Assume that IBM leased equipment that was carried at a cost of $120,000 to
Winston Industries and Ewing Inc. enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston’s specifications. Upon completion of the engines, Winston has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The
On January 1, 2020, Bensen Company leased equipment to Flynn Corporation. The following information pertains to this lease.1. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value
Geiberger Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $120,000 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires five equal annual rentals of $40,800 payable each December 31, beginning December
The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system.Commencement date ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?October 1, 2020Lease
Phelps Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement.1. The lease term is 5 years, with equal annual rental payments of $4,703 at the beginning of each year.2. Ownership does not transfer at the end of the lease term, there is no
Use the information for Geiberger Corporation from BE21.12, except assume the collectibility of the rentals is not probable. Prepare any journal entries for Geiberger on December 31, 2019.In BE21.12Geiberger Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone
Assume the same information as in P21.13. The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system. Commencement date ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?October 1, 2020Lease
Anthony Incorporated leases a piece of machinery to Irving Company on January 1, 2020, under the following terms.1. The lease is to be for 4 years with rental payments of $12,471 to be made at the beginning of each year.2. The machinery’ has a fair value of $67,000, a book value of $50,000, and
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Plote Company. The following information relates to this agreement.1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.2. The fair value
Lewis Corporation entered into a lease agreement on January 1, 2020, to provide Dawkins Company with a piece of machinery. The terms of the lease agreement were as follows.1. The lease is to be for 3 years with rental payments of $10,521 to be made at the beginning of each year.2. The machinery has
Kingston Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is
Explain the difference in lessee income statement and balance sheet presentation for a finance versus an operating lease.
Cleveland Inc. leased a new crane to Abriendo Construction under a 5-year, noncancelable contract starting January 1, 2020. Terms of the lease require payments of $48,555 each January 1, starting January 1, 2020. The crane has an estimated life of 7 years, a fair value of $240,000, and a cost to
Use the information for Kingston Corporation from BE21.16. Prepare all the necessary journal entries for Falls Company (the lessor) for 2020, assuming the equipment is carried at a cost of $200,000.In BE21.16Kingston Corporation leases equipment from Falls Company on January 1, 2020. The lease
On January 1, 2020, a machine was purchased for $900,000 by Young Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to St. Leger Inc. for 3 years on January 1, 2020, with annual rent payments of
Rodgers Corporation agrees on January 1, 2020, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease payments of $12,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. In
Identify the lease classifications for lessors and the criteria that must be met for each classification. What is the relevance of revenue recognition criteria for lessor accounting for leases?
Kaluzniak Corporation leased equipment to Moeller, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,137 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $7,000, a book value of $5,000, and
Use the information for Rodgers Corporation and Packers, Inc. from BE21.18. Assume that for Packers, Inc., the lessor, the collectibility of the lease payments is probable, and the fair value and cost of the equipment is $60,000. Prepare Packers’ 2020 journal entries, assuming the company uses
Use the information for Kaluzniak Corporation and Moeller, Inc. from E21.19.Instructionsa. Explain (and show calculations) how Kaluzniak arrived at the amount of the rental payments used in the lease agreement.b. Prepare the entries for Kaluzniak for 2020.c. How would Kaluzniak’s accounting in
On December 31, 2019, Escapee Company leased machinery from Terminator Corporation for an agreed-upon lease term of 3 years. Escapee agreed to make annual lease payments of $17,000, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $9,000,
Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $25,000, a book value of
Use the information for Escapee Company from BE21.20. Assume the same facts, except Escapee guarantees a residual value of $9,000 at the end of the lease term, which equals the expected residual value of the machinery.(a) Does this change your answer from BE21.20?(b) What if the expected residual
Use the information for Rauch Incorporated and Donahue Corporation from E21.21.Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4-year lease. The equipment
Use the information for Indiana Jones Corporation from BE21.22. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $180,000. Prepare Lost Ark’s 2019 and 2020 journal entries.In BE21.22Indiana Jones Corporation
Giannis Corporation leases a building to Jabari, Inc. on January 1, 2020. The following facts pertain to the lease agreement.1. The lease term is 10 years with equal annual rental payments of $3,449 at the end of each year.2. Ownership does not transfer at the end of the lease term, there is no
Debbink Co. leased machinery from Young, Inc. on January 1, 2020. The lease term was for 8 years, with equal annual rental payments of $5,300 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $2,000, which Debbink is
Brent Corporation owns equipment that cost $80,000 and has a useful life of 8 years with no salvage value. On January 1, 2020, Brent leases the equipment to Havaci Inc. for one year for one rental payment of $15,000 on January 1. Assuming Havaci (lessee) elects to use the short-term lease
On January 1, 2020, Irwin Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Irwin’s books at $28,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease
Bulls, Inc. leases a piece of equipment to Bucks Company on January 1, 2020. The contract stipulates a lease term of 5 years, with equal annual rental payments of $4,523 at the end of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the
Use the information for Bulls, Inc. from BE21.31. Assume that the lease receivable is $30,000, deferred gross profit is $3,000, and the rate of return to amortize the net lease receivable to zero is 7.11%. Prepare Bulls’ journal entry at the end of the first year of the lease to record the
Explain the differences in revenue recognition for the lessor in a sales-type lease, a direct financing lease, and an operating lease.
Hawkins Corporation has the following balances at December 31, 2020.Projected benefit obligation.........................$2,600,000Plan assets at fair value..................................2,000,000Accumulated OCI (PSC)...................................1,100,000How should these balances be
Hobbs Co. has the following defined benefit pension plan balances on January 1, 2020. Projected benefit obligation............................$4,600,000Fair value of plan assets.....................................4,600,000 The interest (settlement) rate applicable to the plan is 10%. On January
Buhl Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan.Plan assets....................................................$480,000Defined benefit obligation............................600,000Pension
Norton Co. had the following amounts related to its pension plan in 2020.Actuarial liability loss for 2020........................$28,000Unexpected asset gain for 2020.......................18,000Accumulated other comprehensive income (G/L) (beginning balance) 7,000 Cr. Determine for 2020(a)
Kramer Co. has prepared the following pension worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the pension plan for 2020. Instructions a. Determine the
Linda Berstler Company sponsors a defined benefit pension plan. The corporation?s actuary provides the following information about the plan. Instructions a. Compute the actual return on the plan assets in 2020. b. Compute the amount of other comprehensive income (G/L) as of December 31, 2020.
For 2020, Sampsell Inc. computed its annual post-retirement expense as $240,900. Sampsell’s contribution to the plan during 2020 was $180,000. Prepare Sampsell’s 2020 entry to record post-retirement expense, assuming Sampsell has no OCI amounts.
Manno Corporation has the following information available concerning its post-retirement benefit plan for 2020.Service cost........................................................................$40,000Interest
The following data relate to the operation of Kramer Co.’s pension plan in 2021. The pension worksheet for 2020 is provided in P20.10.Service cost..............................................................$59,000Actual return on plan assets....................................32,000Amortization
Jack Kelly Company has grown rapidly since its founding in 2007. To instill loyalty in its employees, Kelly is contemplating establishment of a defined benefit plan. Kelly knows that lenders and potential investors will pay close attention to the impact of the pension plan on the company’s
Webb Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan.Plan assets................................................$480,000Projected benefit obligation.....................600,000Pension
Taveras Enterprises provides the following information relative to its defined benefit pension plan.Balances or Values at December 31, 2020Projected benefit obligation................................................................$2,737,000Accumulated benefit
Kenseth Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets. The average remaining service life per employee in 2019 and 2020 is 10 years and in 2021 and 2022 is 12 years. The net gain or loss that
Davis Corporation is a medium-sized manufacturer of paperboard containers and boxes. The corporation sponsors a noncontributory, defined benefit pension plan that covers its 250 employees. Sid Cole has recently been hired as president of Davis Corporation. While reviewing last year’s financial
The following facts apply to the pension plan of Boudreau Inc. for the year 2020.Plan assets, January 1, 2020................................................$490,000Projected benefit obligation, January 1, 2020.....................490,000Settlement
Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2020 and 2021. Instructions a. Compute pension expense for 2020 and 2021. b. Prepare the journal entries to record the pension expense and the company?s funding of the
PENCOMP?s balance sheet at December 31, 2020, is as follows. Additional information concerning PENCOMP?s defined benefit pension plan is as follows. Projected benefit obligation at 12/31/20........................................................$ 820.5Plan assets (fair value) at
Using the information in E20.2, prepare a pension worksheet inserting January 1, 2020, balances, showing December 31, 2020, balances, and the journal entry recording pension expense.Service cost....................................................................................$ 90,000Contribution
Gottschalk Company sponsors a defined benefit plan for its 100 employees. On January 1, 2020, the company’s actuary provided the following information.Accumulated other comprehensive loss (PSC).......................................$150,000Pension plan assets (fair value and market-related asset
At January 1, 2020, Hennein Company had plan assets of $280,000 and a projected benefit obligation of the same amount. During 2020, service cost was $27,500, the settlement rate was 10%, actual and expected return on plan assets were $25,000, contributions were $20,000, and benefits paid were
Veldre Company provides the following information about its defined benefit pension plan for the year 2020.Service cost....................................................................................$ 90,000Contribution to the
Jackson Company adopts acceptable accounting for its defined benefit pension plan on January 1, 2019, with the following beginning balances: plan assets $200,000; projected benefit obligation $250,000. Other data relating to 3 years? operation of the plan are as follows. Instructions a. Prepare a
The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online.InstructionsUse the companies’ financial information to answer the following
The following information is available for the pension plan of Radcliffe Company for the year 2020.Actual and expected return on plan assets.....................$ 15,000Benefits paid to retirees........................................................40,000Contributions
On January 1, 2020, Harrington Company has the following defined benefit pension plan balances. Projected benefit obligation.............$4,500,000Fair value of plan assets.....................4,200,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company
The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to P&G’s financial statements and the accompanying notes to answer the following questions.a. What
The accounting records of Shinault Inc. show the following data for 2020 (its first year of operations).1. Life insurance expense on officers was $9,000.2. Equipment was acquired in early January for $300,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax
What procedures are followed in the allocation of a discount?
Describe the accounting for refund liabilities.
Briefly explain the conditions when a contract modification shall be accounted for as a separate performance obligation.
Hiatt Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2020. The insurance company which administers the pension plan provided the following selected information for the years 2020, 2021, and 2022. There were no balances as of January 1, 2020, when
Andrews Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows.
Aykroyd Inc. has sponsored a noncontributory, defined benefit pension plan for its employees since 1997. Prior to 2020, cumulative net pension expense recognized equaled cumulative contributions to the plan. Other relevant information about the pension plan on January 1, 2020, is as follows.1. The
Villa Company has experienced tough competition, leading it to seek concessions from its employees in the company’s pension plan. In exchange for promises to avoid layoff s and wage cuts, the employees agreed to receive lower pension benefits in the future. As a result, Villa amended its pension
Gingrich Importers provides the following pension plan information.Fair value of pension plan assets, January 1, 2020................................$2,400,000Fair value of pension plan assets, December 31, 2020...........................2,725,000Contributions to the plan in
At December 31, 2020, Besler Corporation had a projected benefit obligation of $560,000, plan assets of $322,000, and prior service cost of $127,000 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2020.
Vickie Plato, accounting clerk in the personnel office of Streisand Corp., has begun to compute pension expense for 2022 but is not sure whether or not she should include the amortization of unrecognized gains/losses. She is currently working with the following beginning-of-the-year present values
Shin Corporation had a projected benefit obligation of $3,100,000 and plan assets of $3,300,000 at January 1, 2020. Shin also had a net actuarial loss of $465,000 in accumulated OCI at January 1, 2020. The average remaining service period of Shin’s employees is 7.5 years. Compute Shin’s minimum
The following defined pension data of Rydell Corp. apply to the year 2020.Projected benefit obligation, 1/1/20 (before amendment)...............................$560,000Plan assets,
Beilman Inc. reports the following pretax income (loss) for both book and tax purposes. The tax rates listed were all enacted by the beginning of 2018. Instructions a. Prepare the journal entries for years 2018?2021 to record income tax expense (benefit) and income taxes payable (refundable),
Teri Hatcher Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2019. It is estimated that the warranty liability will be settled in 2020. The difference in equipment (net) will result in taxable
Sylvie Inc. incurred a net operating loss of $500,000 in 2020. Combined income for 2018 and 2019 was $350,000. The tax rate for all years is 20%. Sylvie elects the carryback option. Prepare the journal entries to record the benefits of the loss carryback and the loss carryforward. Sylvie expects to
Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared. The tax rates in effect are 2019, 20%; 2020 and 2021, 25%. All tax
Using the information from BE19.2, assume this is the only difference between Oxford’s pretax financial income and taxable income. Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable, and show how the deferred tax liability will be
Kleckner Company started operations in 2016. Although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2020), Kleckner appears to have turned the corner and reported modest taxable income of $30,000.
On December 21, 2020, Zurich Company provided you with the following information regarding its trading investments. During 2021, Carolina Co. shares were sold for $9,500. The fair value of the shares on December 31, 2021, was Stargate Corp. shares?$19,300; Vectorman Co.
The financial statements of M&S are presented in Appendix E. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a. What
South Carolina Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $55,000 in 2021, $60,000 in 2022, and $65,000 in 2023. South Carolina’s pretax financial income for 2020 is $300,000, and the tax rate is 30% for all years. There are no
The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to P&G’s financial statements and the accompanying notes to answer the following questions.a. What
The following information is available for Remmers Corporation for 2020.1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $120,000. This difference will reverse in equal amounts of $30,000 over the years 2021–2024.2. Interest received on
In 2020, Amirante Corporation had pretax financial income of $168,000 and taxable income of $120,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 20%. Compute the amount to be reported as income taxes payable at
The following information is available for Wenger Corporation for 2019 (its first year of operations).1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2020–2023.2. Deferral, for book purposes, of $20,000 of rent received in
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