On July 1, 2023, Crane Corp., which uses IFRS, signs a 4-year, non-cancellable lease agreement to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On July 1, 2023, Crane Corp., which uses IFRS, signs a 4-year, non-cancellable lease agreement to lease a equipment from Blossom Ltd. The following information concerns the lease agreement. 1. The equipment's fair value on July 1, 2023 is $259,000. 2. The agreement requires equal rental payments of $58,000.00 beginning on July 1, 2023. 3. The equipment has an estimated economic life of 5 years, with an unguaranteed residual value of $93,000. Crane Corp. depreciates similar equipment using the straight-line method, with no residual value. 4. The lease is non-renewable. At the termination of the lease, the equipment reverts to Blossom. 5. Crane's incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Crane Corp. 6. The yearly rental payment includes $6.543.59 of executory costs related to insurance on the equipment. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Your answer is partially correct. Prepare the journal entries on Crane Corp's books to record the payments and expenses related to this lease for the years 2023 and 2024 as well as any adjusting journal entries at its fiscal year ends of December 31, 2023 and 2024. Crane does not use reversing entries. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 5,125.76. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Dec. 31, 2023 Depreciation Expense Dec. 31,2023 Accumulated Depreciation-Right-of-Use Asset (To record depreciation) Interest Expense Debit 51800 12452.62 June 30, 2024 Lease Liability (To record interest) Insurance Expense Prepaid insurance 327184 June 30, 2024 Insurance Expence 327184 Prepaid Insurance July 1.2024 Interest Expense 12452.62 Insurance Expense 3271.76 Prepaid Insurance 3271.84 Lease Liability Cash Dec. 31, 2024 Depreciation Expense Dec. 31, 2024 Accumulated Depreciation-Right-of-Use Asset (To record depreciation) Interest Expense Lease Llability (To record interest) 6470 10112.39 On July 1, 2023, Crane Corp., which uses IFRS, signs a 4-year, non-cancellable lease agreement to lease a equipment from Blossom Ltd. The following information concerns the lease agreement. 1. The equipment's fair value on July 1, 2023 is $259,000. 2. The agreement requires equal rental payments of $58,000.00 beginning on July 1, 2023. 3. The equipment has an estimated economic life of 5 years, with an unguaranteed residual value of $93,000. Crane Corp. depreciates similar equipment using the straight-line method, with no residual value. 4. The lease is non-renewable. At the termination of the lease, the equipment reverts to Blossom. 5. Crane's incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Crane Corp. 6. The yearly rental payment includes $6.543.59 of executory costs related to insurance on the equipment. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Your answer is partially correct. Prepare the journal entries on Crane Corp's books to record the payments and expenses related to this lease for the years 2023 and 2024 as well as any adjusting journal entries at its fiscal year ends of December 31, 2023 and 2024. Crane does not use reversing entries. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 5,125.76. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Dec. 31, 2023 Depreciation Expense Dec. 31,2023 Accumulated Depreciation-Right-of-Use Asset (To record depreciation) Interest Expense Debit 51800 12452.62 June 30, 2024 Lease Liability (To record interest) Insurance Expense Prepaid insurance 327184 June 30, 2024 Insurance Expence 327184 Prepaid Insurance July 1.2024 Interest Expense 12452.62 Insurance Expense 3271.76 Prepaid Insurance 3271.84 Lease Liability Cash Dec. 31, 2024 Depreciation Expense Dec. 31, 2024 Accumulated Depreciation-Right-of-Use Asset (To record depreciation) Interest Expense Lease Llability (To record interest) 6470 10112.39
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
If I could get all of the solutions it would be extremely helpful!
-
Suppose you borrowed $15,000 at a rate of 10% and must repay it in 5 equal payments at the end of each of the next 5 years. How much would you still owe at the end of the secondyear, after you have...
-
What is a silo mentality, and how does it affect the supply chain?
-
Helium gas is throttled steadily from 500 kPa and 70C. Heat is lost from the helium in the amount of 2.5 kJ/kg to the surroundings at 25C and 100 kPa. If the entropy of the helium increases by 0.25...
-
It has been suggested that daily production of a subassembly would be increased if better lighting were installed and background music and free coffee and doughnuts were provided during the day....
-
Arclight plc, a company producing high-quality household lighting products, is considering diversifying into the furniture business. The project has an expected return of 15 per cent. Arclight plc...
-
Following is a summary of Kellys bank account for the year ended 31 December 19X7: All of the business takings have been paid into the bank with the exception of 9,630. Out of this, Kelly has paid...
-
Fogelberg Corporation is a regional company which is an SEC registrant. The corporations securities are thinly traded on NASDAQ (National Association of Securities Dealers Quotes). Fogelberg has...
-
Refer to Target's financial statements for the year ended February 3, 2018. Note 3 provides information on an accounting change Target made in fiscal 2017. Was this a change in estimate, a change in...
-
Use Gauss-Jordan elimination and check for linear row independence in each matrix below. What is the rank of each matrix? a) A = [2] b) B = [] 6 c) C = L-is d) D= [] 31 e) E = 2 L4 [0-11-4] 6 2 1 0
-
The sign test is valid for any continuous population. In Exercises 5 and 6, determine whether the statement is true or false. If the statement is false, rewrite it as a true statement.
-
The test statistic for the sign test is the frequency of the most frequently appearing sign. In Exercises 5 and 6, determine whether the statement is true or false. If the statement is false, rewrite...
-
Job 303 includes direct materials cost of \($500\) and direct labor costs of \($400.\) If the manufacturing overhead allocation rate is 70% of direct labor cost, what is the total cost assigned to...
-
Wolfgang Heinz stocks an item with a unit cost of $80, reorder cost of $100 and holding cost of $2 a unit a week. Demand for the item has a mean of 100 a week with standard deviation 10. Lead time is...
-
The null hypothesis for the rank-sum test is that the two population medians are equal. In Exercises 5 and 6, determine whether the statement is true or false. If the statement is false, rewrite it...
-
3.2-4. Rate of Drawing Blood. You have recently visited your doctor for a physical examination and are required to have blood work performed. Although blood is a complex fluid, we will assume it's a...
-
Transform the while loop from the previous exercise into an equivalent for loop (make sure it produces the same output).
-
The Lorenz Model is a simple model for atmospheric convection developed by Edward Lorenz in 1963. The system is given by three equations: \[\begin{aligned} \frac{d x}{d t} & =\sigma(y-x) \\ \frac{d...
-
Show that the system \(x^{\prime}=x-y-x^{3}, y^{\prime}=x+y-y^{3}\), has at least one limit cycle by picking an appropriate \(\psi(x, y)\) in Dulac's Criteria.
-
In Equation (3.153), we saw a linear version of an epidemic model. The commonly used nonlinear SIR model is given by \[\begin{align*} \frac{d S}{d t} & =-\beta S I \\ \frac{d I}{d t} & =\beta S...
Study smarter with the SolutionInn App