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Which of the following is not a sufficient criterion for a lessor to classify a lease...
Which of the following lease criteria would not qualify a lease as a capital lease? Multiple...
Which of the following lease criteria would not qualify a lease as a capital lease? Multiple Choice The lease term is equal to or greater than 75% of the estimated economic life of the leased property. The lease transfers ownership of the property to the lessee by the end of the lease term. The present value of the minimum lease payments equals or exceeds 90% of the fair value of the leased property. The lease contains an option to purchase...
Under U.S. GAAP, which of the following items would require a lessee to classify a lease of equipment as a capital lease...
Under U.S. GAAP, which of the following items would require a lessee to classify a lease of equipment as a capital lease? a. The lease term is 90% of the estimated economic life of the lease property. b. The lease does not contain a bargain purchase option. c. The present value of the contractual minimum lease payments is 75% of the fair value of the leased property. d. There is no transfer of ownership to the lessee at the end...
Which of the following is not a condition requiring the use of the capital lease reporting...
Which of the following is not a condition requiring the use of the capital lease reporting method? Select one: A. The lease automatically transfers ownership of the leased asset from the lessor to the lessee at the termination of the lease. B. The lease provides that the lessee can purchase the leased asset for a nominal amount (bargain purchase price) at the termination of the lease. C. The lease term is at least 75% of the remaining estimated economic useful...
One of the criteria for a lease to be classified as a sales-type lease by the...
One of the criteria for a lease to be classified as a sales-type lease by the lessor is that the present value of the sum of (1) the lease payments and (2) any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the leased asset. Substantially all of the fair value of the leased asset generally is considered to be O 90% 25% 60% 75%
Problem 4: Assume the same facts as for Problem 3. A. For the lessor, is the lease a finance lease (sales-type) or...
Problem 4: Assume the same facts as for Problem 3. A. For the lessor, is the lease a finance lease (sales-type) or an operating lease? Explain why or why not. B. Prepare the lessor's journal entries through 12/31/Yr1. Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the Lease 12/31/YO Annual lease payment (Payment 1 due immediately) $20,472 Bargain Purchase Option (Lessee expects to exercise) $4,000 Lease Term 5 years Economic Life...
Lessor Sales Company and Lessee Manufacturing Company agreed to a noncancelable lease. The follow...
Lessor Sales Company and Lessee Manufacturing Company agreed to a noncancelable lease. The following in- formation is available to both entities regarding the lease terms and the leased asset. I. Lessor's cost of the leased asset was $30,000. The asset was new at the inception of the lease term. 2. Lease term is three years starting January 1,2020 3. Estimated useful life of the leased asset is six years. Estimated residual value at end of six years is zero. 4....
Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date...
Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the lease 12/31/YO Annual lease payment Payment 1 due immediately) $20,472 Bargain Purchase Option (lessee expects to exercise) $4,000 Lease Term 5 years Economic Life of Leased Asset 10 years Lessor's Cost of the asset $65,000 Fair Value of the asset $91.000 Lessor's Implicit Rate & Lessee's Incremental Borrowing Rate The collectability of the lease payments by Lessor is probable. A. For the...
E21.13 (LO 2,4) (Lessee-Lessor Entries, Sales-Type Lease; Guaranteed Residual Value) Phelps Company leases a building to...
E21.13 (LO 2,4) (Lessee-Lessor Entries, Sales-Type Lease; Guaranteed Residual Value) Phelps Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $4,703 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building...
Assume that Tropical has reasonable assurance that Bayview will make the remaining lease payments. All costs...
Assume that Tropical has reasonable assurance that Bayview will make the remaining lease payments. All costs of operating the leased equipment are borne by Bayview. Assume that both companies have a December 31st year end. Answer the following relative to the above information. Criteria Assessment 1. Does the lessee have the option to purchase the asset at a price that is expected to be substantially lower than the fair value at the date the option becomes exercisable? 2. Is the...
Prepare a lease amortization schedule for NextCar for the 5-year term.
The following facts pertain to a non-cancelable lease agreement between Ford and NextCar, a lessee. Lease Origination Date May 1, 2017 Annual lease payments due at the beginning of each lease year $20.471.94 Bargain purchase option price at the end of lease term $4,000 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $65,000 Fair value of asset on May 1, 2017 $91,000 Fair value of asset on May 1, 2022 ...
One of the criteria for a lease to be classified as a sales-type lease by the lessor is that the present value of the sum of (1) the lease payments and (2) any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the leased asset. Substantially all of the fair value of the leased asset generally is considered to be O 90% 25% 60% 75%
Problem 4: Assume the same facts as for Problem 3. A. For the lessor, is the lease a finance lease (sales-type) or an operating lease? Explain why or why not. B. Prepare the lessor's journal entries through 12/31/Yr1. Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the Lease 12/31/YO Annual lease payment (Payment 1 due immediately) $20,472 Bargain Purchase Option (Lessee expects to exercise) $4,000 Lease Term 5 years Economic Life...
Lessor Sales Company and Lessee Manufacturing Company agreed to a noncancelable lease. The following in- formation is available to both entities regarding the lease terms and the leased asset. I. Lessor's cost of the leased asset was $30,000. The asset was new at the inception of the lease term. 2. Lease term is three years starting January 1,2020 3. Estimated useful life of the leased asset is six years. Estimated residual value at end of six years is zero. 4....
Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the lease 12/31/YO Annual lease payment Payment 1 due immediately) $20,472 Bargain Purchase Option (lessee expects to exercise) $4,000 Lease Term 5 years Economic Life of Leased Asset 10 years Lessor's Cost of the asset $65,000 Fair Value of the asset $91.000 Lessor's Implicit Rate & Lessee's Incremental Borrowing Rate The collectability of the lease payments by Lessor is probable. A. For the...
E21.13 (LO 2,4) (Lessee-Lessor Entries, Sales-Type Lease; Guaranteed Residual Value) Phelps Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $4,703 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building...
Assume that Tropical has reasonable assurance that Bayview will make the remaining lease payments. All costs of operating the leased equipment are borne by Bayview. Assume that both companies have a December 31st year end. Answer the following relative to the above information. Criteria Assessment 1. Does the lessee have the option to purchase the asset at a price that is expected to be substantially lower than the fair value at the date the option becomes exercisable? 2. Is the...
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