Elmer’s Restaurants (Seller-Lessee)
No. |
Date |
General journal |
Debit |
Credit |
1 |
1/1/20 |
Cash |
680000 |
|
Equipment |
600000 |
|||
Gain on sale of equipment |
80000 |
|||
2 |
1/1/20 |
Right-of-Use Asset |
322775 |
|
Lease Liability (115970*2.78326) |
322775 |
|||
3 |
1/1/20 |
Lease Liability |
115970 |
|
Cash |
115970 |
|||
4 |
12/31/20 |
Lease expense |
115970 |
|
Lease liability |
16544 |
|||
Right-of-Use Asset |
99426 |
Present value of an annuity due for 3 periods at 8% is 2.78326
Lease is treated as operating lease as not criterions for finance lease classification are met
Liquidity Finance Co. (Buyer-Lessor)
No. |
Date |
General journal |
Debit |
Credit |
1 |
1/1/20 |
Equipment |
680000 |
|
Cash |
680000 |
|||
2 |
1/1/20 |
Cash |
322775 |
|
Unearned Lease Revenue |
322775 |
|||
3 |
12/31/20 |
Unearned Lease Revenue |
115970 |
|
Lease revenue |
115970 |
|||
4 |
12/31/20 |
Depreciation Expense |
68000 |
|
Accumulated Depreciation – Equipment ($680,000 ÷ 10) |
68000 |
Lease is treated as operating lease as not criterions for sales-type lease classification are met
E21.23 (LOS) (Sale-Leaseback) Assume that on January 1, 2020. Elmer's Restaurants sells a com- puter system...
Assume that on January 1, 2020, Elmer's Restaurants sells a computer system to Ivanhoe Finance Car for Information is as follows mediately leaves the computer system back. The relevant 1. The computer was carried on Elmer's books at a value of $780,000 2. The term of the non-cancelable lease is 3 years, title will not transfer to Elmer's, and the expected residual value at the end of the lease is $630,000, all of which is unguaranteed. 3. The lease agreement...
Exercise 21-15 Assume that on January 1, 2017, Elmer's Restaurants sells a computer system to Liquidity Finance Co.for $647,000 and immediately leases the computer system back. The relevant information is as follows. 1. The computer was carried on Elmer's books at a value of $566,000. 2. The term of the noncancelable lease is 10 years: title will transfer to Elmer 3. The lease agreement requires equal rental payments of $105,296 at the end of each year. 4. The incremental borrowing...
Exercise 21-15 Assume that on January 1, 2017, Elmer's Restaurants sells a computer system to Liquidity Finance Co. for $709,000 and immediately leases the computer system back. The relevant information is as follows. 1. The computer was carried on Elmer's books at a value of $636,000. 2. The term of the noncancelable lease is 10 years; title will transfer to Elmer 3. The lease agreement requires equal rental payments of $115,386 at the end of each year 4. The incremental...
Assume that on January 1, 2017, Elmer’s
Restaurants sells a computer system to Liquidity Finance
Co. for $733,000 and immediately leases the computer system back.
The relevant information is as follows.
1.
The computer was carried on
Elmer’s books at a value of $657,000.
2.
The term of the noncancelable
lease is 10 years; title will transfer to Elmer.
3.
The lease agreement requires
equal rental payments of $119,292 at the end of each year.
4.
The incremental borrowing
rate...
Assume that on January 1, 2017, Elmer’s Restaurants sells a computer system to Liquidity Finance Co. for $683,000 and immediately leases the computer system back. The relevant information is as follows. 1. The computer was carried on Elmer’s books at a value of $600,000. 2. The term of the noncancelable lease is 10 years; title will transfer to Elmer. 3. The lease agreement requires equal rental payments of $111,155 at the end of each year. 4. The incremental borrowing rate...
Please assist with answering the correct Account titles and
figures in red! Please show all work! Thank you!
Your answer is partially correct. Try again Assume that on January 1, 2017, Elmer's Restaurants sells a computer system to Crane Finance Co. for $640,000 and immediately leases the computer system back. The relevant information is as follows. The computer was carried on Elmer's books at a value of $560,000 The term of the non-cancelable lease is 3 years; title will not...
E21.24 (LO 5) (Lessee-Lessor, Sale-Leaseback) Respond to the requirements in each situation. Instructions a. On January 1, 2020, Zarle Inc. sold computer equipment to Daniell Co. The sales price of the equipment was $520,000 and its carrying amount is $400,000. Record any Journal entries necessary for Zarle from the sale of the computer equipment in 2020. b. Use the information from part a. Assume that, on the same day the sale occurred, Zarle enters into an agreement to lease the...
Laura Leasing Company signs an agreement on January 1, 2020, to
lease equipment to Skysong Company. The following information
relates to this agreement.
1.
The term of the non-cancelable lease is 3 years with no renewal
option. The equipment has an estimated economic life of 5
years.
2.
The fair value of the asset at January 1, 2020, is
$77,000.
3.
The asset will revert to the lessor at the end of the lease
term, at which time the asset...
Salaur Company, a risky start-up, is evaluating a lease arrangement being offered by TSP Company for use of a standard computer system. The lease is non-cancelable, and in no case does Salaur receive title to the computers during or at the end of the lease term. TSP will lease the returned computers to other customers. The lease starts on January 1, 2020, with the first rental payment due on January 1, 2020. Additional information related to the lease and the...
Problem 4. On January 1, 2019. Erk, the lessee, and Betty, the lessor, signed a noncancelable lease agreement for Betty's equipment with a carrying amount of $75,000. The lease term is seven years with rental payments of $10,000 at the beginning of each year. Erk's incremental borrowing rate is 9%. The equipment is expected to have a residual value of $15,000 at the end of the lease, unguaranteed, and a useful life of 15 years. The collectability of the lease...