Recording Operating Lease Entries-Lessee On January 1, 2020, Merick Inc. purchased a building for $4 million...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Recording Operating Lease Entries-Lessee On January 1, 2020, Merick Inc. purchased a building for $4 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Kregor Construction for $260,000 a year payable January 1 of each year starting January 1, 2020. The lease term is five years with no renewal or purchase option reasonably expected to be exercised. There are no uncertainties surrounding collection. The implicit rate of the lease is 7% known by Kregor Construction. a. How would Kregor Construction classify the lease? Arnortization Schedule of Lease Liability Amortization Schedule of Right-of-Use Asset Journal Entries b. Prepare an amortization schedule of the lease liability. Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Lease Interest Reduction of Date Payment on Liability Lease Liability Lease Liability Jan. 1, 2020 Jan. 1, 2020 $ 车 Jan. 1, 2021 Jan. 1, 2022 Jan, 1, 2023 Jan. 1, 2024 Total Recording Operating Lease Entries-Lessee On January 1, 2020, Merick Inc. purchased a building for $4 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Kregor Construction for $260,000 a year payable January 1 of each year starting January 1, 2020. The lease term is five years with no renewal or purchase option reasonably expected to be exercised. There are no uncertainties surrounding collection. The implicit rate of the lease is 7% known by Kregor Construction. a. How would Kregor Construction classify the lease? Arnortization Schedule of Lease Liability Amortization Schedule of Right-of-Use Asset Journal Entries C. Prepare an amortization schedule of the right-of-use asset. Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Straight-Line Interest Amortization of Right-of-Use Date Expense on Liability Right-of-Use Asset Asset Jan. 1, 2020 Year 2020 24 Year 2021 Year 2022 Year 2023 Year 2024 Total Amortization Schedule of Lease Liability Amortization Schedule of Right-of-Use Asset Journal Entries d. Prepare the entries for Kregor Construction for years 2020 and 2021, assuming Kregor Construction's accounting year ends Decermber 31. • Note: Round arnounts to the nearest whole dollar. • Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. Jan. 1, 2020 To record lease liability and right-of-use asset Jan. 1, 2020 To record lease payment Dec. 31, 2020 To record lease expense Jan. 1, 2021 To record lease payment Dec. 31, 2021 To record lease exnense Recording Operating Lease Entries-Lessee On January 1, 2020, Merick Inc. purchased a building for $4 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Kregor Construction for $260,000 a year payable January 1 of each year starting January 1, 2020. The lease term is five years with no renewal or purchase option reasonably expected to be exercised. There are no uncertainties surrounding collection. The implicit rate of the lease is 7% known by Kregor Construction. a. How would Kregor Construction classify the lease? Arnortization Schedule of Lease Liability Amortization Schedule of Right-of-Use Asset Journal Entries b. Prepare an amortization schedule of the lease liability. Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Lease Interest Reduction of Date Payment on Liability Lease Liability Lease Liability Jan. 1, 2020 Jan. 1, 2020 $ 车 Jan. 1, 2021 Jan. 1, 2022 Jan, 1, 2023 Jan. 1, 2024 Total Recording Operating Lease Entries-Lessee On January 1, 2020, Merick Inc. purchased a building for $4 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Kregor Construction for $260,000 a year payable January 1 of each year starting January 1, 2020. The lease term is five years with no renewal or purchase option reasonably expected to be exercised. There are no uncertainties surrounding collection. The implicit rate of the lease is 7% known by Kregor Construction. a. How would Kregor Construction classify the lease? Arnortization Schedule of Lease Liability Amortization Schedule of Right-of-Use Asset Journal Entries C. Prepare an amortization schedule of the right-of-use asset. Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Straight-Line Interest Amortization of Right-of-Use Date Expense on Liability Right-of-Use Asset Asset Jan. 1, 2020 Year 2020 24 Year 2021 Year 2022 Year 2023 Year 2024 Total Amortization Schedule of Lease Liability Amortization Schedule of Right-of-Use Asset Journal Entries d. Prepare the entries for Kregor Construction for years 2020 and 2021, assuming Kregor Construction's accounting year ends Decermber 31. • Note: Round arnounts to the nearest whole dollar. • Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. Jan. 1, 2020 To record lease liability and right-of-use asset Jan. 1, 2020 To record lease payment Dec. 31, 2020 To record lease expense Jan. 1, 2021 To record lease payment Dec. 31, 2021 To record lease exnense
Expert Answer:
Answer rating: 100% (QA)
Answer to the Question is based on IFRS 16 Leases 1 How Lease transaction to be recognized in book o... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
On January 1, 2012, Ravioli, Inc., purchased a building for a cash price of $192,000 and accrued property taxes of $14,950. The building is estimated to have a useful life of 10 years and no salvage...
-
On January 1, 2011, Klinefelter Company purchased a building for $520,000. The building had an estimated life of 20 years and an estimated residual value of $20,000. The company has been depreciating...
-
On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31,...
-
"If nominal GDP rises, velocity must rise." Is this statement true, false, or uncertain? Explain your answer.
-
Using the information in Chapters 1719, calculate the amount of ATP that can be produced from one molecule of lactose metabolized aerobically through glycolysis and the citric acid cycle.
-
A binary system power plant uses mercury for the high-temperature cycle and water for the low-temperature cycle, as shown in Fig. 11.39. The temperatures and pressures are shown in the corresponding...
-
Success at Quitting Smoking After six months, 156 of the 914 smokers who accepted the invitation to be in the reward-only program stopped smoking, while 78 of the 146 smokers who paid a deposit quit....
-
Two cars, A and B, travel in a straight line. The distance of A from the starting point is given as a function of time by >At) = at + pt, with a = 2.60 m/s and p = 1.20 m/s. The distance of B from...
-
As Kelly gained approval for the project plan now, he has to get the security clearance from the IT administrator to access the site. To gain security clearance, you are required to write an email to...
-
Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current...
-
The balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows: E Ltd. $ 96,000 57,000 228,000 24,000 $ 405,000 $ 63,000 97,500 153,000 91,500 Cash and receivables Inventory Plant...
-
Use the British method to design a GP concrete mix that is required to have a specified mean strength of 35 MPa at 28 days. The presence of reinforcement requires a slump of 75 mm and a maximum size...
-
Feldstein tells DiMaria thatGM forecast operating exposure for all its regions on a monthly basis. Then, the "riskiness" of these exposures is calculated by multiplying the net (regional) exposure by...
-
You are required, as the broker to call your client, Wes/Wendy Evans (you/your volunteer may choose the name they prefer to use) and provide them with the outcome of their loan application. Wes/Wendy...
-
A35000$ machine has 6 yeas depreciable life and a 10000$ salvage value at the end of the years. Compute the depreciation schedule and the book value at the end of each year using sum of year's digits...
-
1. The company stock name is Amazon 2.=1.15 52-week change for the stock=27.67% the S&P 500=36.35% the 6-month rate=0.06% The formula for the CAPM is expressed as: R STOCK = R RF + ( R M - R RF )...
-
Blue Enterprises had several transactions this month, as listed below. If the beginning balance of the Cash account was $437,000, what is the balance of the Cash account at the end of the month? 1....
-
A consumer magazine is evaluating five brands of trash compactors for their effectiveness in reducing the volume of typical household products that are discarded. In the experiment, each block...
-
Available information from Panosian Company for the years 2012 and 2011 is as follows: Required Prepare a horizontal analysis of Panosian Company's balances. Round percentages to one decimal point...
-
A company with no inventory buys the following three inventory items: On January 10, the company sells one item for $10. On January 15, the company sells a second item $10. The company uses a...
-
A company incurs the following expenditures related to currently owned fixed assets: Annual pressure washing of building, $5,000 New engine in delivery truck, $4,500 Repair of water damage caused...
-
Explain the working of domestic refrigeration system with a neat sketch?
-
Fluid is a substance that: (a) Cannot be subjected to shear force (b) Always expands until it fills any container (c) Has the same shear stress at a point regardless of its motion (d) Cannot remain...
-
Discuss about psychrometry and their properties?
Study smarter with the SolutionInn App