On 2 January 2 0 X 5 , Jayden Inc ( lessee ) entered into an agreement
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Question:
On January X Jayden Inc lessee entered into an agreement with Holstead Inc lessor to lease some equipment for five years. The terms of the agreement are as follows:
The fair value of the equipment at the inception of the lease is $ Additional direct costs relating to the lease amount to $
Lease payments are $ per year, payable at the end of each lease year. The first payment will be due on December X
The equipments expected useful life is seven years.
The estimated unguaranteed fair value of the equipment at the end of the lease term is $
Jayden and Holstead have entered into a number of leasing arrangements in the past, with no issues.
Holstead applies ASPE.
PV of $ PVA of $ and PVAD of $Use appropriate factors from the tables provided.
Required:
Calculate the rate implicit in the lease for Holstead.
How is this lease classified for Holstead Inc.
Prepare the lease amortization table for Holstead.
Prepare the journal entries for Holstead for X to X using the net method. Assume that in X Holstead is able to sell the equipment for cash proceeds of $If no entry is required for a transactionevent select No journal entry required" in the first account field.
Related Book For
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
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