![vaelriacb9300](/avatars/18358.jpg)
vaelriacb9300
07.04.2020 •
Business
Glaus Leasing Company agrees to lease equipment to Jensen Corporation on January 1, 2020. 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 of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $50,000. Jensen estimates that the expected residual value at the end of the lease term will be $50,000. Jensen amortizes all of its leased equipment on a straight-line basis.
4. The lease agreement requires equal annual rental payments, beginning on January 1, 2017.
5. The collectibility of the lease payments is probable.
6. Glaus desires a 5% rate of return on its investments. Jensen's incremental borrowing rate is 6%, and the lessor's implicit rate is unknown. Instructions (Assume the accounting period ends on December 31.)
Required:
(a) Discuss the nature of this lease for both the lessee and the lessor.
(b) Calculate the amount of the annual rental payment required.
(c) Compute the value of the lease liability to the lessee.
(d) Prepare the journal entries Jensen would make in 2017 and 2018 related to the lease arrangement.
(e) Prepare the journal entries Glaus would make in 2017 and 2018 related to the lease arrangement.
(f) Suppose Jensen expects the residual value at the end of the lease term to be $40,000 but still guarantees a residual of $50,000. Compute the value of the lease liability at lease commencement.
Solved
Show answers
More tips
- L Leisure and Entertainment Choosing the Right Books to Read: Tips and Recommendations...
- L Leisure and Entertainment What can be considered an antique: defining and valuing old objects...
- B Business and Finance How to Open an Online Store? A Detailed Guide for Beginners...
- C Computers and Internet Log-in: what is it and why do you need it?...
- C Computers and Internet What is the Meaning of lol and How Did it Become Popular?...
- C Computers and Internet Clearing Cache: How to Speed Up Your Browser...
- H Health and Medicine How to Help Men Gain Weight?...
- F Family and Home How to Build a Strong Relationship with Your Child: Tips for Effective Communication...
- L Legal consultation Juvenile Justice: Who Needs It?...
- F Food and Cooking What age is appropriate for giving your child cocoa?...
Ответ:
Solution:
a. It is a capital lease to Jensen, because the leasing period is more than 75% of the economic existence of the rented asset. The leasing duration is 78% (7-9) of the economic life of the commodity. That is a capital lease to Glaus, since the collectibility of the lease fees is fairly stable, there are no significant surprises regarding the expenses remaining to be borne by the lessor, so there is a lea. If the market valuation ($700,000) of the property equals the expense of the lessor ($525,000), the contract is a sale-type deal.
b. Calculation of annual rental payment:
**Present value of $1 at 10% for 7 periods.
**Present value of an annuity due at 10% for 7 periods
c. Computation of present value of minimum lease payments:
PV of annual payments: $121,130 X 5.23054 =
PV of guaranteed residual value:
$50,000 X 0.48166 = 24,083
**Present value of an annuity due at 11% for 7 periods.
**Present value of $1 at 11% for 7 periods
d. 1/1/14 Leased Equipment................................681,741
Lease Liability...............................681,741
Lease Liability.......................................121,130
Cash...............................................121,130
12/31/14 Depreciation Expense.......................... 83,106
Accumulated Depreciation—Capital Leases
($681,741 – $100,000) ÷ 7 ..........83,106
Interest Expense................................... 61,667
Interest Payable ($681,741 – $121,130) X .11......61,667
1/1/15 Lease Liability....................................... 59,463
Interest Payable.................................... 61,667
Cash...............................................121,130
12/31/15 Depreciation Expense.......................... 83,106
Accumulated Depreciation - Capital Leases..........................83,106
Interest Expense................................... 55,126
e) 1/1/14 Lease Receivable..................................700,000
Cost of Goods Sold..............................525,000
Sales Revenue...............................700,000
Inventory........................................525,000
Cash.......................................................121,130
Lease Receivable..........................121,130
12/31/14 Interest Receivable............................... 57,887
Interest Revenue [($700,000 – $121,130) X .10]....57,887
1/1/15 Cash.......................................................121,130
Lease Receivable..........................63,243
Interest Receivable.......................57,8871
2/31/15 Interest Receivable............................... 51,563
Interest Revenue
($700,000 – $121,130 - $63,243) X .10...............................51,5635
Ответ:
maybe me
Explanation:
what about ?
just maybe