In a lessee and lessor relationship can one have a finance lease while the other has...
In a lessee and lessor relationship can one have a finance lease while the other has a operating lease or do they both have to have the same type of lease?
Homework Answers
If a lessee and lessor involves in single lease agreement then both have to have same type of lease that is either Finance Lease or Operating Lease because at the same time, the lease can't be treated as both finance lease and operating lease. In case of Finance lease, the lessee will get ownership at the end of the term period and in case of Operating Lease, the lessor will continue to have the ownership during the complete tenure of the lease. Hence, the lessee and lessor both have to have the same type of lease.
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In a lessee and lessor relationship can one have a finance lease
while the other has...
Journalize the transactions in the books of lessor and lessee if the lease meets the criteria...
Journalize the transactions in the books of lessor and lessee if the lease meets the criteria for recognition as an operating lease instead of a finance lease.
Brief Exercise 15-3 (Algo) Lessee and lessor; calculate interest; finance/sales-type lease (LO15-2] A finance lease agreement...
Brief Exercise 15-3 (Algo) Lessee and lessor; calculate interest; finance/sales-type lease (LO15-2] A finance lease agreement calls for quarterly lease payments of $6,809 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $190,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What...
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...
Part 2: Classifying Leases 1. Lessee Co. leases a common piece of machinery from Lessor Corp....
Part 2: Classifying Leases 1. Lessee Co. leases a common piece of machinery from Lessor Corp. The lease begins on January 1, 2019, and includes the following details: • The lease has a term of four years and is non-cancelable. • The lease contains no renewal or purchase options. The machinery reverts to Lesson Corp. at the termination of the lease. • The machinery has a fair value at commencement of the lease of $40,000, an estimated economic life of...
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....
rart V. Lessee and Lessor enter into a lease agreement on January 1, 2019. for equipment....
rart V. Lessee and Lessor enter into a lease agreement on January 1, 2019. for equipment. The following data are relevant to the lease agreement: The term of the non-cancelable lease is 5 years. Payments of $13.000 including executory costs of $3.000 are due at the end each year. 2. The equipment has an economic life of 10 years with a residual value of $15,000 at the end of the lease, but not guaranteed. The equipment's fair value equals its...
Part V: Lessee and Lessor enter into a lease agreement on January 1, 2019, for equipment....
Part V: Lessee and Lessor enter into a lease agreement on January 1, 2019, for equipment. The following data are relevant to the lease agreement: 1. The term of the non-cancelable lease is 5 years. Payments of $13,000 including executory costs of $3,000 are due at the end each year. 2. The equipment has an economic life of 10 years with a residual value of $15,000 at the end of the lease, but not guaranteed. The equipment's fair value equals...
Lessee Company leases heavy equipment on January 1, 2016, under a capital lease from Lessor Company...
Lessee Company leases heavy equipment on January 1, 2016, under a capital lease from Lessor Company with the following lease provisions: 1. The lease is non-cancelable and has a term of 10 years 2. The lease does not contain a renewal or bargain purchase option 3. The annual rentals are 27,653.77, payable at the beginning of each year. 4. Lessee agrees to pay all executory costs 5. The interest rate implicit in the lease is 12%, which is known by...
(Lessee-Lessor Entries, Finance Lease with a Guaranteed Residual Value) (LO 2, 4) Glaus Leasing Company agrees...
(Lessee-Lessor Entries, Finance Lease with a Guaranteed Residual Value) (LO 2, 4) Glaus Leasing Company agrees to lease equipment to Jensen Corporation on January 1, 2017. The following information relates to the lease agreement. 1.The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2.The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2017, is $700,000. 3.At the end...
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with...
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with two renewal options of one year each, for equipment having a useful life of 12 years. Lessee's incremental borrowing rate is 8% while Lessor's implicit rate is 5% and known to Lessee. The Lessee uses the straight-line method of depreciation. The lease contains the following provisions: 1. Annual rental payments of $20,000 payable at the beginning of each year, starting January 1, 2019. 2....
Brief Exercise 15-3 (Algo) Lessee and lessor; calculate interest; finance/sales-type lease (LO15-2] A finance lease agreement calls for quarterly lease payments of $6,809 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $190,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What...
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...
Part 2: Classifying Leases 1. Lessee Co. leases a common piece of machinery from Lessor Corp. The lease begins on January 1, 2019, and includes the following details: • The lease has a term of four years and is non-cancelable. • The lease contains no renewal or purchase options. The machinery reverts to Lesson Corp. at the termination of the lease. • The machinery has a fair value at commencement of the lease of $40,000, an estimated economic life of...
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....
rart V. Lessee and Lessor enter into a lease agreement on January 1, 2019. for equipment. The following data are relevant to the lease agreement: The term of the non-cancelable lease is 5 years. Payments of $13.000 including executory costs of $3.000 are due at the end each year. 2. The equipment has an economic life of 10 years with a residual value of $15,000 at the end of the lease, but not guaranteed. The equipment's fair value equals its...
Part V: Lessee and Lessor enter into a lease agreement on January 1, 2019, for equipment. The following data are relevant to the lease agreement: 1. The term of the non-cancelable lease is 5 years. Payments of $13,000 including executory costs of $3,000 are due at the end each year. 2. The equipment has an economic life of 10 years with a residual value of $15,000 at the end of the lease, but not guaranteed. The equipment's fair value equals...
Part VI: Lessee and Lessor on January 1, 2019 enter into a 4-year non-cancelable lease, with two renewal options of one year each, for equipment having a useful life of 12 years. Lessee's incremental borrowing rate is 8% while Lessor's implicit rate is 5% and known to Lessee. The Lessee uses the straight-line method of depreciation. The lease contains the following provisions: 1. Annual rental payments of $20,000 payable at the beginning of each year, starting January 1, 2019. 2....
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