BenLin Co. is a lessee under finance lease. The asset is recorded at P4,500,000 and has economic life of 8 years. The lease term is 5 years. The asset is expected to have a fair value of P1,500,000 at the end of 5 years and a fair value of P500,000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of depreciation expense should be recorded for the first year of the lease?
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BenLin Co. is a lessee under finance lease. The asset is recorded at P4,500,000 and has economic life of 8 years. The lease term is 5 years. The asset is expected to have a fair value of P1,500,000 at the end of 5 years and a fair value of P500,000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of
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- Wilcox Ltd finance company purchases a machine for $160,000 at the request of Upland Manufacturing Ltd, which then leases it to Upland for $60,000 per annum for three years. The payments are to be made at the commencement of each year including the first year of the lease period. Wilcox Ltd incurs costs of $1,500 to establish the lease. The lease is non-cancellable and classified as a finance lease by the lessor. The interest rate implicit in the lease is 10%. There is no guaranteed or unguaranteed residual value at the end of the lease period. Required: Prepare the journal entries for Wilcox Ltd to record the initial recognition of lease related assets and interest income for three years under AASB 16/IFRS 16Sunland Corporation is a lessee with a finance lease. The asset is recorded at $1020000 and has an economic life of 8 years. The lease term is 5 years. The asset is expected to have a fair value of $360000 at the end of 5 years, and a fair value of $130000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of amortization expense would the lessee record for the first year of the lease? $132000 $111250 $178000 $204000Oriole Corporation is a lessee with a finance lease. The asset is recorded at $720000 and has an economic life of 8 years. The lease term is 5 years. The asset is expected to have a fair value of $210000 at the end of 5 years, and a fair value of $55000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of amortization expense would the lessee record for the first year of the lease? $133000 $144000 $102000 $83125
- Lessee enters into a three year lease of equipment and agrees to make the following annual payments at the end of each year 10,000 in year one, 12,000 in year two and 14,000 in year three. Discount rate is approx. 4, 235% and right of use asset is depreciated on a straight line basis over the lease term. What is the value of the lease liability at the end of years 2 & 3?The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 11,500 Year 2: $ 16,500 Year 3: $ 21,500 Year 4: $ 26,500 An appropriate discount rate is 7 percentage, yielding a present value of $62,927. a-5. If the lease is an operating lease, what will be the amortization expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.) b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset? b-2. If the lease is a finance lease, what will be the initial value of the lease liability? b-3. If the lease is a finance lease, what will be the lease expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.) b-4. If the lease is a finance lease, what will be the interest expense shown on the income statement at the end of year 1?…Ericson Company leased an asset to another entity. The o COst The lease provided for a transfer of title to the lessee at the of the asset was P7,994,000. Terms of the lease specify and four year-end rental payments. The lease qualified as a four-year life for the lease, an annual interest rate of 15%, direct financing lease... The lease provided for a transfer of title to the lessee end of the lease term. After the fourth year, the residual value was estimated P1,000,000. at The PV of 1 at 15% for 4 periods is .572, and the PV of a. ordinary annuity of 1 at 15% for 4 periods is 2.855. What is the annual rental payment? a. 2,000,000 b. 3,000,350 c. 2,800,000 d. 2,599,650
- The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 11,500 Year 2: $ 16,500 Year 3: $ 21,500 Year 4: $ 26,500 An appropriate discount rate is 7 percentage, yielding a present value of $62,927.a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? a-2. If the lease is an operating lease, what will be the initial value of the lease liability? a-3. If the lease is an operating lease, what will be the lease expense shown on the income statement at the end of year 1? a-4. If the lease is an operating lease, what will be the interest expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.)Zhongli Co. (lessee) entered into a contract of lease with Rex Lapis Co. (lessor) that allows Zhongli to occupy a parcel of land owned by Rex Lapis. The following terms were agreed on January 1, 2020:• P300,000 annual rental, the first payment of which will start on December 31, 2020 and every December 31 hereafter, for a total of 5 payments.• Implicit rate of the lease was 12%, while the incremental borrowing rate of Zhongli was 10%.• The present value factors of an ordinary annuity for 5 periods are:10% 3.790812% 3.6048Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)a. What amount of lease liability will be recorded by Zhongli on January 1, 2020?b. Prepare an amortization table for the lease liability.c. Prepare the journal entries in the books of Zhongli for the year 2020Metlock Company leases a building and land. The lease term is 8 years and the annual fixed payments are $840,000. The lease arrangement gives Metlock the right to purchase the building and land for $13,550,000 at the end of the lease. Based on an economic analysis of the lease at the commencement date, Metlock is reasonably certain that the fair value of the leased assets at the end of lease term will be much higher than $13,550,000. What are the total lease payments in this lease arrangement? Total lease payments Click if you would like to Show Work for this question: Open Show Work
- Lagace Ltd. entered into a lease on June 1, 2020. The lease term is six years and requires annual rental payments of $30,000 at the beginning of each year. Lagace’s incremental borrowing rate is 8% and the rate implicit in the lease is 9%. (a) Calculate the capitalized amount of the right-to-use asset if Lagace follows IFRS 16. (b) Calculate the capitalized amount of the leased asset if Lagace follows ASPE. Show calculations using any of the following methods: (1) factor A.5, (2) a financial calculator, or (3) Excel function PV. Round final answers to the nearest cent.On 1 July 2020, Andrew Ltd enters into a 5-year agreement to lease an item of machinery from Josh Ltd. Andrew Ltd incurred costs of $4 500 in setting up the lease agreement. The machinery has a fair value of $450 000 at the inception of the lease and it is expected to have an economic life of 6 years, after which time it will have a residual value of $35 000. The lease agreement details are as follows: Length of lease 5years Commencement date 1 July 2020 Annual lease payment, payable 30 June each year commencing 30 June 2021 $95,000 Residual value at the end of the lease term $80,000 Residual value guarantee by Andrew Ltd $50,000 Interest rate implicit in the lease 10% The lease is cancellable without any penalties All insurance and maintenance costs are paid by Josh Ltd and are expected to amount to $15 000 per year and will be reimbursed by Andrew Ltd by being included in the annual lease payment of $95 000. The machinery will be…Eubank Company, a lessee, enters into a lease agreement on January 1, 2021, for equipment. The following data are relevant to the lease agreement: - The term of the noncancelable lease is 4 years. Payments of $978,446 are due on January 1 of each year. The first payment is January 2021. - The fair value of the equipment on January 1, 2021 is $3,500,000. The equipment has an economic life of 6 years with nosalvage value. - Eubank uses the straight-line method of depreciation. - Eubank’s implicit rate is 8%. - This will be treated as a finance lease (Lessee Perspective). Instructions: Prepare the journal entries on Eubank’s books (lessee) that relate to the lease agreement for the following dates, you do not need to create an amortization schedule. a. January 1, 2021. b. December 31, 2021.