On January 1, 20x1, ABC Financing Co. leased equipment to XYZ Inc. Information on the lease...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 20x1, ABC Financing Co. leased equipment to XYZ Inc. Information on the lease is shown below.. Cost of Equipment Useful Life of Equipment Lease Term Annual rent payable at the end of each year. Market rate of interest Residual Value P300,000 5 years 4 years 100,000 10% 20,000 The equipment will revert back to ABC at the end of the lease term. The lease is classified as sales type lease. Requirements: Compute for the following assuming the residual value 1s (1) guaranteed and (2) unguaranteed a. Gross investment in the lease on January 1, 20x1 b. Net-investment in the lease on January 1, 20x1 c. Total interest income to be recognized over the lease term d. Sales, cost of sales and gross profit recognized on the lease. e. Journal entry on January 1, 20x1. On January 1, 20x1, ABC Financing Co. leased equipment to XYZ Inc. Information on the lease is shown below.. Cost of Equipment Useful Life of Equipment Lease Term Annual rent payable at the end of each year. Market rate of interest Residual Value P300,000 5 years 4 years 100,000 10% 20,000 The equipment will revert back to ABC at the end of the lease term. The lease is classified as sales type lease. Requirements: Compute for the following assuming the residual value 1s (1) guaranteed and (2) unguaranteed a. Gross investment in the lease on January 1, 20x1 b. Net-investment in the lease on January 1, 20x1 c. Total interest income to be recognized over the lease term d. Sales, cost of sales and gross profit recognized on the lease. e. Journal entry on January 1, 20x1.
Expert Answer:
Answer rating: 100% (QA)
a Gross investment in the lease on January 1 20x1 Gross Investment Cost of Equipment Initial Direct ... View the full answer
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
On January 1, 2021, IMBROGLIO Co. leased equipment to COMPLICATION, Inc. Information on the lease is shown below: Cost of equipment 1,200,000 Useful life of equipment 5 years Lease term 4 years...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
How is it that a state, or any state, such as Oregon, can offer more provisions under FMLA (OFLA) than then the federal rule of FMLA does?
-
Nunez Company accumulates the following adjustment data at December 31. Indicate (a) The type of adjustment (prepaid expense, accrued revenues and so on), and (b) The status of accounts before...
-
Let P(x) = anxn + an1xn1 + + a1x + a0 be a polynomial, and let x0 be given. Construct an algorithm to evaluate P(x0) using nested multiplication.
-
What are endorphins, and what causes cells in the brain to release them?
-
The Accounts Receivable Confirmation Statistics working paper shown on the next page was prepared by an audit assistant for the 2013 audit of Lewis County Water Company, Inc., a continuing audit...
-
Go to an Online news source like one of the following: New York Times on the Web CNN Fox Business BBC Business A Local News Publication Find a story in this week's news about financial management....
-
Potholes All along the sides of Route 10, residents displayed signs saying: "County Executive: Fix this Road!" Wanting to minimize the negative publicity associated with this sign campaign, the...
-
Which of the following aqueous solutions is a weak electrolyte O CICI la OHF la O HCI al O HINO, laal
-
What do tax evasion, tax avoidance and Tax planning have in common?
-
Sue's business building ($600,000 adjusted basis) is blown away by a tornado in June 2021. Sue receives insurance proceeds of $1,000,000 in February 2022. If Sue uses the $1,000,000 and an additional...
-
Examine the following C program segment. What is the value of result after the program has executed? int main(void) } double y[] = (1.5,2.2, 4.3, 7.5, 9.1, 10, 5), result; int i=0, j=0; result =...
-
Buying a historic building in 2024 and paying a broker's commission will contribute how much to GDP in 2024?
-
Examine the following C program segment. What is the value of result after the program has executed? int main(void) { double yll (1.5,2.2, 4.3, 7.5, 9.1, 10,5), result; int i=0, j=0; result return 0;...
-
Alia Maisarah is the owner and operator of Alia's Bakery, a shop that runs a business making cakes and biscuits in Parit Raja, Batu Pahat. On September 1, 2018, Alia's Bakery has the following assets...
-
Consider the activities undertaken by a medical clinic in your area. Required 1. Do you consider a job order cost accounting system appropriate for the clinic? 2. Identify as many factors as possible...
-
Teicher Company presents the following condensed comparative income statements for 2015, 2016, and 2017: Required: Prepare rate of change analyses for Teicher for 2016 and 2017 using year-to-year...
-
Bangles Corporation issued 5 -year, 11% bonds with a face value of $300,000 on April 1 for $288,000. Interest is paid semiannually' at October 1 and April 1. Prepare the journal entries to record the...
-
Briefly list the format of a companys balance sheet under IFRS.
-
A person standing on a skateboard on horizontal ground pulls on a rope fastened to a cart. Both the person and the cart are initially at rest. Use the Procedure box to identify an isolated system and...
-
(a) Classify and give examples of the kinds of processes that can change (i) the number of loaves of bread in a bakery, (ii) the number of Lego pieces inside a house, and (iii) the number of coins in...
-
A small stone is fastened to the top of a standard cart of inertia \(1 \mathrm{~kg}\) to form a combination of unknown inertia \(m_{1}\). A second standard cart is then launched with an initial...
Study smarter with the SolutionInn App