Help System Announcements CALCULATOR PRINTER VERSION NEXT Problem 21-12 (Part Level Submission) Concord Industries and Marigold Inc. enter into an agreement that requires Marigold Inc. to build three diesel-electric engines to Concord's specifications Upon completion of the engines, Concord has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non- cancelable, becomes effective on January 1, 2020, and requires annual rental payments of $356,846 each January 1, starting January 1, 2020. Concord's incremental borrowing rate is 8%. The implicit interest rate used by Marigold and known to Concord is 6%. The total cost of building the three engines is $2,395,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Concord depreciates similar equipment on a straight-line basis. At the end of the lease, Concord assumes title to the engines. Collectibility of the lease payments is probable. Click here to view factor tables (a) Your answer is correct. Discuss the nature of this lease transaction from the viewpoints of both lessee and lessor. The lease should be treated as al Tinance lease by Concord Industries The lease should be treated as a sales-type lease by Marigold Inc. Click if you would like to show Work for this question: Open Show Work SHOW ANSWER SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT S Kitso, Sintermediate Accounting, 17e CALCULATOR PRINTER VERSION NEXT (b), (c) and (d) (b) Prepare the journal entry to record the transaction on January 1, 2020, on the books of Concord (the lessee). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to o decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit (c) Prepare the journal entry to record the transaction on January 1, 2020, on the books of Marigold (the lessor). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to o decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit (d) Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Lessee (January 1, 2020) Lessor (January 1, 2020) Debit Credit Click if you would like to show Work for this question: Open Show Work Help System Announcements CALCULATOR PRINTER VERSION NEXT Problem 21-12 (Part Level Submission) Concord Industries and Marigold Inc. enter into an agreement that requires Marigold Inc. to build three diesel-electric engines to Concord's specifications Upon completion of the engines, Concord has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non- cancelable, becomes effective on January 1, 2020, and requires annual rental payments of $356,846 each January 1, starting January 1, 2020. Concord's incremental borrowing rate is 8%. The implicit interest rate used by Marigold and known to Concord is 6%. The total cost of building the three engines is $2,395,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Concord depreciates similar equipment on a straight-line basis. At the end of the lease, Concord assumes title to the engines. Collectibility of the lease payments is probable. Click here to view factor tables (a) Your answer is correct. Discuss the nature of this lease transaction from the viewpoints of both lessee and lessor. The lease should be treated as al Tinance lease by Concord Industries The lease should be treated as a sales-type lease by Marigold Inc. Click if you would like to show Work for this question: Open Show Work SHOW ANSWER SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT S Kitso, Sintermediate Accounting, 17e CALCULATOR PRINTER VERSION NEXT (b), (c) and (d) (b) Prepare the journal entry to record the transaction on January 1, 2020, on the books of Concord (the lessee). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to o decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit (c) Prepare the journal entry to record the transaction on January 1, 2020, on the books of Marigold (the lessor). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to o decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit (d) Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Lessee (January 1, 2020) Lessor (January 1, 2020) Debit Credit Click if you would like to show Work for this question: Open Show Work