On January 1, 2022 the Red Corp. leased an equipment with the following information: Fixed annual...

 

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On January 1, 2022 the Red Corp. leased an equipment with the following information: Fixed annual payments at the end of each year Lease term Useful life of equipment Residual value at the end of the useful life Implicit rate Incremental borrowing rate Dismantling and restoration costs Initial direct cost Red corporation has the option the buy the unit at the end of the lease for : and it is reasonably certain that it will exercise its bargain price option Lease incentive received from Lessor on Jan. 1, 2022 Cash deposit/advance to the lessor on Jan. 1, 2022 PV of annuity of 1 for 10 periods @ 12% PV of 1 for 10 periods @ 12% 1,000,000 10 years 12 years 600,000 12% 14% 100,000 250,000 700,000 150,000 1,000,000 5.6502 0.3220 Required: A) Analyze then show your solutions in the analysis and solution1 worksheet. B) From the analysis and solutions 1worksheet, transpose your answers to this answer worksheet in the highlighted spaces. If otherwise, invalidated answer = 0 C) Prepare and show the amort shed1 and the JE1's in the allotted worksheets 1) What is the initial lease liability? 2) What is the cost of right of use asset? 3) How much is the depreciation expense for year 2022? 4) How much is the book value of the ROUA at the end of year 2022? 6) How much is the interest expense at the end of year 2022? 7) How much is the carrying cost of Lease Liab. At the end of the 10 year 5) Prepare an amortization schedule 8) Prepare the journal entries for year 2022 lease? Answer see amort sched1 see JE1 LEASE LIAB. AMORTIZATION SCHEDULE Year Date Payment Interest Expense Principal CA of Liabilities pts RED CORPORATION JOURNAL ENTRIES Date Particulars Debit Credit PFRS16 LESSEE ACCOUNTING RED CORPORATION Problem Analysis and computations Required: 1) What is the initial lease liability? 2) What is the cost of right of use asset? 3) How much is the depreciation expense for year 2022? 4) How much is the book value of the ROUA at the end of year 2022? 5) Prepare an amortization schedule 6) Prepare the journal entries to record the transactions in Lessee books for 2022 and 2023 On January 1, 2022 the Red Corp. leased an equipment with the following information: Fixed annual payments at the end of each year Lease term Useful life of equipment Residual value at the end of the useful life Implicit rate Incremental borrowing rate Dismantling and restoration costs Initial direct cost Red corporation has the option the buy the unit at the end of the lease for : and it is reasonably certain that it will exercise its bargain price option Lease incentive received from Lessor on Jan. 1, 2022 Cash deposit/advance to the lessor on Jan. 1, 2022 PV of annuity of 1 for 10 periods @ 12% PV of 1 for 10 periods @ 12% 1,000,000 10 years 12 years 600,000 12% 14% 100,000 250,000 700,000 150,000 1,000,000 5.6502 0.3220 Required: A) Analyze then show your solutions in the analysis and solution1 worksheet. B) From the analysis and solutions 1worksheet, transpose your answers to this answer worksheet in the highlighted spaces. If otherwise, invalidated answer = 0 C) Prepare and show the amort shed1 and the JE1's in the allotted worksheets 1) What is the initial lease liability? 2) What is the cost of right of use asset? 3) How much is the depreciation expense for year 2022? 4) How much is the book value of the ROUA at the end of year 2022? 6) How much is the interest expense at the end of year 2022? 7) How much is the carrying cost of Lease Liab. At the end of the 10 year 5) Prepare an amortization schedule 8) Prepare the journal entries for year 2022 lease? Answer see amort sched1 see JE1 LEASE LIAB. AMORTIZATION SCHEDULE Year Date Payment Interest Expense Principal CA of Liabilities pts RED CORPORATION JOURNAL ENTRIES Date Particulars Debit Credit PFRS16 LESSEE ACCOUNTING RED CORPORATION Problem Analysis and computations Required: 1) What is the initial lease liability? 2) What is the cost of right of use asset? 3) How much is the depreciation expense for year 2022? 4) How much is the book value of the ROUA at the end of year 2022? 5) Prepare an amortization schedule 6) Prepare the journal entries to record the transactions in Lessee books for 2022 and 2023

Answer rating: 100% (QA)

Answer Analysis and Solutions 1 Initial Lease Liability Initial lease liability is calculated as the ... View the full answer