Indigo Corporation leased equipment to Teal Mountain, Inc. on January 1, 2017. The lease agreement called...

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Indigo Corporation leased equipment to Teal Mountain, Inc. on January 1, 2017. The lease agreement called for annual rental payments of $1,290 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 $9,700, a book value of $7,700, and Indigo expects a residual value of $7,200 at the end of the lease term. Indigo set the lease payments with the intent of earning a c % return, though Teal Mountain is unaware of the rate implicit in the lease and has an incremental borrowing rate of 8%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is correct. Determine the nature of the lease to both Indigo and Teal Mountain. Eating The lease is a/an Toperating lease to Teal Mountain. The lease is a/an loperating lease to Indigo. Your answer is partially correct. Try again. Prepare all necessary journal entries for Teal Mountain in 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation 1/1/17 Right-of-Use Asset Lease Liability (To record the lease) 1/1/17 Lease Liability 12/31/17 Cash (To record lease liability) Lease Liability Right-of-Use Asset Lease liability 9700 Debit Right-of-use-asset 9700 3590 11290 Credit x Your answer is incorrect. Try again. How would the measurement of the lease liability and right-of-use asset be affected if, as a result of the lease contract, Teal Mountain was also required to pay $600 in commissions, prepay $700 in addition to the first rental payment, and pay $150 of insurance each year? (Round answers to 0 decimal places, e.g. 5,275.) 45 3590 44 1290 Indigo Corporation leased equipment to Teal Mountain, Inc. on January 1, 2017. The lease agreement called for annual rental payments of $1,290 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 $9,700, a book value of $7,700, and Indigo expects a residual value of $7,200 at the end of the lease term. Indigo set the lease payments with the intent of earning a c % return, though Teal Mountain is unaware of the rate implicit in the lease and has an incremental borrowing rate of 8%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is correct. Determine the nature of the lease to both Indigo and Teal Mountain. Eating The lease is a/an Toperating lease to Teal Mountain. The lease is a/an loperating lease to Indigo. Your answer is partially correct. Try again. Prepare all necessary journal entries for Teal Mountain in 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation 1/1/17 Right-of-Use Asset Lease Liability (To record the lease) 1/1/17 Lease Liability 12/31/17 Cash (To record lease liability) Lease Liability Right-of-Use Asset Lease liability 9700 Debit Right-of-use-asset 9700 3590 11290 Credit x Your answer is incorrect. Try again. How would the measurement of the lease liability and right-of-use asset be affected if, as a result of the lease contract, Teal Mountain was also required to pay $600 in commissions, prepay $700 in addition to the first rental payment, and pay $150 of insurance each year? (Round answers to 0 decimal places, e.g. 5,275.) 45 3590 44 1290

Answer rating: 100% (QA)

Part 1 The lease is an operating lease to Teal Mountain The lease is an operating lease to Indigo Co... View the full answer