Kubina Enterprise entered into a lease arrangement of a machine on January 1, 2020. The agreement...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Kubina Enterprise entered into a lease arrangement of a machine on January 1, 2020. The agreement if for a period of four years. The machine is expected to have a useful life of ten years on the date of the lease. The implicit rate in the lease if 14%, but the incremental borrowing rate is 18%. The annual rental payment is expected to be $2.5 million. In addition, the lessee is expected to pay legal fees in cash amounting to $300,000 to assist with establishing the lease agreement. Legal fees were paid on January 1, 2020. Required: a. Prepare all the journal entries over the life of the above lease. | 14 marks | b. Construct the amortization schedule for the lease above. | 10 marks | c. Outline the significance of IFRIC in the standard setting process. |3 marks | Kubina Enterprise entered into a lease arrangement of a machine on January 1, 2020. The agreement if for a period of four years. The machine is expected to have a useful life of ten years on the date of the lease. The implicit rate in the lease if 14%, but the incremental borrowing rate is 18%. The annual rental payment is expected to be $2.5 million. In addition, the lessee is expected to pay legal fees in cash amounting to $300,000 to assist with establishing the lease agreement. Legal fees were paid on January 1, 2020. Required: a. Prepare all the journal entries over the life of the above lease. | 14 marks | b. Construct the amortization schedule for the lease above. | 10 marks | c. Outline the significance of IFRIC in the standard setting process. |3 marks |
Expert Answer:
Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Posted Date:
Students also viewed these accounting questions
-
The equipment was expected to have a useful life of three years, or 25,000 operating hours, and a residual value of $4,500. The equipment was used for 12,000 hours during 2008, 9,000 hours in 2009,...
-
On January 1, 2019, Carius Corporation (lessee) entered into a lease agreement for a warehouse facility with Patel Storage, Inc. (lessor). The lease agreement calls for 6 equal lease payments of...
-
A Starbucks franchisee purchased a coffee drink machine on January 1, 2011, for $44,000. The expected useful life is ten years or 100,000 drinks. In 2010, 3,000 drinks were sold, and in 2011, 14,000...
-
Problem 1: The three velocities shown would indicate that the body is not rigid. Given that the body is known to be rigid, one of the three velocities is clearly incorrect. Draw all lines and take...
-
Riley Fontaine has requested that you review the calculation of his 20X1 net income for tax purposes. He has provided you with the following information: 1. His salary consists of the following: The...
-
The following information was taken directly from the footnotes to the financial statements of Best Buy: 1. We recognize revenue at the time the customer takes possession of the merchandise. 2. We...
-
Redesign the fractionator of Example 6.8 using a random packing. The column is to be packed with 50-mm metal Pall rings. Determine the diameter of the tower, the height of packing in the stripping...
-
For Lodes Company, the relevant range of production is 4080% of capacity. At 40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Diagram the behavior of each cost within the...
-
A tiling company has been tasked to tile the floor of a new shopping mall using the following materials and creating the design which follows: . Square marble slabs . Heavy duty rods on the outer...
-
Software Haven sells a software package that is available in three editions. The application should display the price of the edition a customer wants to purchase. The retail prices for the Ultimate,...
-
Find c for the 2-periodic shifted pulse F(x) 1 for sxs+h elsewhere in [-*,*] {}
-
The rights of shareholders are established only in the articles of incorporation. (True/False)
-
Management serves as the representative of the employees in bargaining with the union over the rights of the employees. (True/False)
-
In a consolidation, one corporation acquires all the assets and liabilities of another corporation, which then ceases to exist. (True/False)
-
Why do companies need to be careful about whom they hire and how much they supervise or monitor their employees?
-
What are the effects of a partners dissociation from a partnership?
-
Define and explain the distributed computing model and give examples of said model.
-
In a nonmagnetic medium, E = 50 cos (10 9 t 8x) a y + 40 sin (10 9 t 8x) a z V/m find the dielectric constant r and the corresponding H.
-
Data on the physical inventory of Winesap Co. as of December 31, 2010, are presented in the working papers. The quantity of each commodity on hand has been determined and recorded on the inventory...
-
Which of the three methods of inventory costingFIFO, LIFO, or average cost will in general yield an inventory cost most nearly approximating current replacement cost?
-
How often should standards be revised?
-
Let \(\left\{x_{n}ight\}_{n=1}^{\infty}\) be a sequence of real numbers defined by \(x_{n}=n 2^{-n}\), for all \(n \in \mathbb{N}\). Compute \[\liminf _{n ightarrow \infty} x_{n}\] and \[\limsup _{n...
-
Let \(\left\{x_{n}ight\}_{n=1}^{\infty}\) be a sequence of real numbers defined by \(x_{n}=n^{(-1)^{n}-n}\) for all \(n \in \mathbb{N}\). Compute \[\liminf _{n ightarrow \infty} x_{n},\] and...
-
Let \(\left\{x_{n}ight\}_{n=1}^{\infty}\) and \(\left\{y_{n}ight\}_{n=1}^{\infty}\) be sequences of real numbers such that \[\lim _{n ightarrow \infty} x_{n}=x\] and \[\lim _{n ightarrow \infty}...
Study smarter with the SolutionInn App