Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a useful life of seven years. The initial lease term was for three years. After two years, Taylor Company and Lease Corp. agree to extend the lease term by four years, and to change the amount of lease payments. The additional four years were not originally an option. The increase in present value of lease payments for Taylor is $200,000. The present value of the remaining lease payments for Lease Corp is $300,000. The initial cost of the equipment to Lease Corp was $500,000. The useful life of the equipment is estimated to be seven years and depreciation is computed straight-line with no residual value. How should Lease Corp account for this lease modification? (Select all that apply)
Multiple select question.
credit asset $500,000
debit lease receivable for $300,000
debit accumulated depreciation for $142,857
credit lease payable for $200,000
debit cost of goods sold for $357,143
debit cost of goods sold for $500,000
credit sales revenue for $300,000
debit right-of-use asset for $200,000
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a...
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a useful life of seven years. The initial lease term was for three years. After two years, Taylor Company and Lease Corp. agree to extend the lease term by four years, and to change the amount of lease payments. The additional four years were not originally an option. The increase in present value of lease payments for Taylor is $200,000. The present value of the...
On January 1, 2021, Company A leased equipment from Company B. The lease agreement specifies seven annual payments of $50,000 beginning January 1, 2021, the beginning of the lease, and at each December 31, thereafter. At the end of the seven-year lease term the equipment will be returned to the lessor and is expected to have a residual value of $24,000. The estimated useful life of the equipment is eight years. The interest rate in these financing arrangements is 10%....
1. On January 1, 2021, Sans Serif Publishers leased printing equipment from First Lease Corp. First Lease Corp purchased the equipment from CompuDec Corporation at a cost of $479,079. · The lease agreement specifies six annual payments of $90,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 from 2021 through 2025. • The six-year lease term ending December 31, 2026, is two years less than the expected useful life . There is no obligation...
Buffalo Corp., which uses IFRS, signs non-renewable, non-cancellable lease agreement to lease robotic equipment from Xiu Inc. The following information concerns the lease agreement. Inception date Lease term Fair value of equipment Jan. 1, 2020 Economic life of leased equipment Annual rental payments starting Jan. 1, 2020 Option to purchase at the end of the term Depreciation method Residual value Buffalo's incremental borrowing rate January 1, 2020 5 years $240,000 7 years $40,850 none Straight-line none 6% Using (1) factor...
22 On January 1, 2021, Company A leased equipment from Company B. The lease agreement specifies ten annual payments of $20,000 beginning January 1, 2021, the beginning of the lease, and at each December 31, thereafter. At the end of the ten- year lease term the equipment will be returned to the lessor and is expected to have a residual value of $12,000. The estimated useful life of the equipment is twelve years. The interest rate in these financing arrangements...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $59,349 over a five-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 6%. The asset being leased cost Mann $215,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $49,998 over a six-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 7%. The asset being leased cost Mann $205,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $52,917 over a five-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 4%. The asset being leased cost Mann $195,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $49,677 over a five-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 4%. The asset being leased cost Mann $180,000 to produce. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s)...
CH 15 Homework Saved 5 King Company leased equipment from Mann Industries. The lease agreement qualifies as a finance lease and requires annual lease payments of $51,023 over a seven-year lease term (also the asset's useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. The asset being leased cost Mann $260,000 to produce. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD...