Alkhaleej Inc. leased a drilling equipment from a regional oil services company. Alkhaleej Inc. is agreeing...
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Alkhaleej Inc. leased a drilling equipment from a regional oil services company. Alkhaleej Inc. is agreeing to pay 120,000 every 6 months The oil company purchased the drilling equipment from an international drilling equipment manufacturer at a cost of $550,000. The following information is given: Lease term Payment frequency Economic life of the asset Rate (lessors and the lowest rate) For lesse 3 years semiannual (at the beginning of the periods) Requirements 1. What types of lease is this? And why? For Both Lessee & Lessor For lessor 3 12% 2. Write the entry at the inception of the lease. (lessee) 3. Write the entry at the inception of the lease. (lessor) (4 points) (2 points) (4 points) Alkhaleej Inc. leased a drilling equipment from a regional oil services company. Alkhaleej Inc. is agreeing to pay 120,000 every 6 months The oil company purchased the drilling equipment from an international drilling equipment manufacturer at a cost of $550,000. The following information is given: Lease term Payment frequency Economic life of the asset Rate (lessors and the lowest rate) For lesse 3 years semiannual (at the beginning of the periods) Requirements 1. What types of lease is this? And why? For Both Lessee & Lessor For lessor 3 12% 2. Write the entry at the inception of the lease. (lessee) 3. Write the entry at the inception of the lease. (lessor) (4 points) (2 points) (4 points)
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Answer rating: 100% (QA)
1 Based on the given information the type of lease in this scenario can be classified as a finance lease for both the lessee Alkhaleej Inc and the les... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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