Hey Ltd leased a building from There Ltd on 1 July 2020. The building is in...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Hey Ltd leased a building from There Ltd on 1 July 2020. The building is in the records of There Ltd at its fair value of $535,212 on 1 July 2020. There Ltd incurred $2,500 in costs to prepare and execute the lease document. The lease agreement contained the following details: Lease term 10 years Economic life of the building 15 years Annual rental payments, in arrears (commencing 30/06/21) $90,000 Residual value of the building at the end of the lease $40,000 term Residual value of the building guaranteed by Hey Ltd $25,000 Interest rate implicit in the lease 10% PV of $1 in 10 years at 10% 0.3855 PV of $1 annuity at 10% with 9 payments 5.7590 PV of $1 annuity at 10% with 10 payments 6.1446 The annual payments of $90,000 include $5,000 to reimburse There Ltd for maintenance and insurance costs that will need paid by There Ltd. Hey Ltd incurred $1,650 in costs to negotiate the lease agreement. The building will be returned to There Ltd at the end of the lease term. Hey Ltd and There Ltd have a reporting period ending 30 June. Required: 1. Prepare the necessary journal entries for the lease arrangement at 30 June 2021 in the records of Hey Ltd. Hey Ltd leased a building from There Ltd on 1 July 2020. The building is in the records of There Ltd at its fair value of $535,212 on 1 July 2020. There Ltd incurred $2,500 in costs to prepare and execute the lease document. The lease agreement contained the following details: Lease term 10 years Economic life of the building 15 years Annual rental payments, in arrears (commencing 30/06/21) $90,000 Residual value of the building at the end of the lease $40,000 term Residual value of the building guaranteed by Hey Ltd $25,000 Interest rate implicit in the lease 10% PV of $1 in 10 years at 10% 0.3855 PV of $1 annuity at 10% with 9 payments 5.7590 PV of $1 annuity at 10% with 10 payments 6.1446 The annual payments of $90,000 include $5,000 to reimburse There Ltd for maintenance and insurance costs that will need paid by There Ltd. Hey Ltd incurred $1,650 in costs to negotiate the lease agreement. The building will be returned to There Ltd at the end of the lease term. Hey Ltd and There Ltd have a reporting period ending 30 June. Required: 1. Prepare the necessary journal entries for the lease arrangement at 30 June 2021 in the records of Hey Ltd.
Expert Answer:
Answer rating: 100% (QA)
lease term 10 years Economic life of bulding 15 years Annual rental Payments 90000 ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The following accounts appear in the records of Paisan Inc. at December 31, 2022. Instructions Prepare the stockholders equity section at December 31. Calculate ratios to evaluate dividend and...
-
Dry Ltd leased a building from Wet Ltd on 1 July 2019. The building is in the records of Wet Ltd at its fair value of $535,212 on 1 July 2019. Wet Ltd incurred $2,500 in costs to prepare and execute...
-
On 1 July 2020 Octavio Ltd acquired some corporate bonds issued by Garnish Ltd. These bonds cost $11,682,000. They had a face value of $10 million and offered a coupon rate of 10 per cent paid...
-
In figure, one end of a uniform beam weighing 20 x V3N is attached to a wall with a hinge. The other end is supported by a wire connected to the wall as shown. If the tension in the wire is a x 10N,...
-
Public Agenda conducted a survey of 1,379 parents and 1,342 students in grades 612 regarding the importance of science and mathematics in the school curriculum (Associated Press, February 15, 2006)....
-
The figure shows two displacement vectors and . Vector points at an angle of 22 o above has an x component B x = 35.0 m and has an unknown y component B y . These two vectors are equal. Concepts: (i)...
-
Use Bluetooth to connect a simple sensor, such as an electric eye, to a database.
-
Mattola Company is giving each of its employees a holiday bonus of $100 on December 20 (a nonpayday). The company wants each employee's check to be $100. The supplemental tax percent is used. a. What...
-
Raul works in an environment that has little segmentation and few elements. What can be said about the degree of homogeneity in his environment?
-
In the spinner problem (see Example 2.1) divide the unit circumference into three arcs of length 1/2, 1/3, and 1/6. Write a program to simulate the spinner experiment 1000 times and print out what...
-
Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable and fixed portions of its car...
-
This week's discussion will be in the form of a video review: Write a brief summary of the video answering the following questions: . Why is it helpful to understand management from a historical...
-
Suppose a company incurs a cost of $1,500 per unit if they increase production and a cost of $1,000 per unit if they decrease production. what is the best way to maintain linearity?
-
Need help writing about my job's background and why recruitment strategies is important in my job and what they do. This is what I have so far. If there's anything to add please help The organization...
-
Specifically Bank of America, what are the impacts of the "great resignation" on your company or industry (3-4 pgs): How has the post-COVID "great resignation" of 2020-22 affected Bank of America's...
-
Chapter 4 LO 2. Describe bases fro identifying target segments. LO 4. Identify the essentials of a positioning strategy. Chapter 5 LO 3. Discuss how brand communication influences consumer's...
-
find the column percentages The different educational levels are no college degree (None), associate's degree (AA), bachelor's degree (BA), master's degree (MA), and PhD. The three levels of tenure...
-
Suppose the spot and six-month forward rates on the Norwegian krone are Kr 5.78 and Kr 5.86, respectively. The annual risk-free rate in the United States is 3.8 percent, and the annual risk-free rate...
-
The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of Under Armour, Inc. are presented in Appendix C. Instructions a. Based on the information...
-
It is one thing to prepare a personal budget; it is another thing to stick to it. Financial planners have suggested various mechanisms to provide support for enforcing personal budgets. One approach...
-
For Eckstein Company, the predetermined overhead rate is 130% of direct labor cost. During the month, Eckstein incurred $100,000 of factory labor costs, of which $85,000 is direct labor and $15,000...
-
We can make a static measurement to deduce the spring constant to use in the model. If a \(61 \mathrm{~kg}\) woman stands on a low wall with her full weight on the ball of one foot and the heel free...
-
If, during a stride, the stretch causes her center of mass to lower by \(10 \mathrm{~mm}\), what is the stored energy? A. \(3.0 \mathrm{~J}\) B. \(6.0 \mathrm{~J}\) C. \(9.0 \mathrm{~J}\) D. \(12...
-
A \(1.00 \mathrm{~kg}\) block is attached to a horizontal spring with spring INT constant \(2500 \mathrm{~N} / \mathrm{m}\). The block is at rest on a frictionless surface. A \(10.0 \mathrm{~g}\)...
Study smarter with the SolutionInn App