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P21-14. Please answer c,d,e, and SHOW ALL WORKINGS CLEARLY. Also, please state whether they are a lessee or lessor.
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- Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).MN.17. On 1 July 2020 Jane Ltd (lessor) leased equipment to Austin Ltd (Lessee). The equipment had a fair value of $369,824. This was also the present value of the lease payments .The lease agreement contained the following details: Lease term 5 years Economic life 6 years Annual rental payment in arrears commencing 30June 2021 $90,000 Residual Value at end of lease term $80,000 Residual Value guaranteed by lessee 80,ooo Interest rate implicit in lease 12% Lease is cancellable with permission of lessor, Jane Ltd .Lease is classified as a finance Lease by the Lessor . Required: (a)Prepare the Lease payment schedule for Austin Ltd, Lessee, for the first two years, for the year ended 30 June 2021 and for the year ended 30 June 2022.
- On January 1. 2022, XYZ Lessee leased equipment from Standey Inc. Lessor, signing an Operating Lease with the folowing terms - Both the cost and the fair value of the asset for Stanley Inc. Lessor is $360,000 • Lease specifies 4 annual payments of S60,273 beginning January 1. 2022. and on each January 1 thereater trough 202s. The 4year tarm ends on December 31. 2026 - The asset's expected residual value at the end of the lease term (4 years) is $175,000, unguaranteed by the Lessee The expected useful life of the equipment is 7 years, and there is no expected residual value at the end of its useful ife There is no purchase option, and the equipment reverts back to the Lessor at the end of the 4-year period The implicit rate on the lease is 6%, and XYZ Lessee is aware of that rate. Assume Straight Line Depreciation is used on the Right of Use Asset. Present Value factors are the folowing PV of $1 79209 66506 PV of Annuity Due 3.67301 5.91732 n=7 6% Ar December 31. 2022. end of the first…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 2020On 1 July 2023, Station Ltd leased machinery to Depot Ltd. The machinery was purchased by Station Ltd on 1 July 2023 for its fair value of $233,556. The lease agreement contained the following provisions: Lease term 3 years Economic life of machinery 5 years Annual rental payment, in arrears (commencing 30/6/2024) $75,000 Residual value at end of the lease term $45,000 Residual guaranteed by lessee $30,000 Interest rate implicit in lease 7% Depot Ltd incurred $1 200 in costs to negotiate the lease arrangement. Depot Ltd intends to return the machinery to the lessor at the end of the lease term. The reporting period ends 30 June. Required: Prepare a lease payment schedule for Depot Ltd. Prepare the journal entries for 1 July 2023 and 30 June 2024.
- 9. On 1 July 2015, Vertical Ltd leased a processing plant to Bell Ltd. The plant was purchased by Vertical Ltd on 1 July 2019 for its fair value of $959,424. The lease agreement contained the following provisions: Lease term 3 yearsEconomic life of plant 5 yearsPresent value of MLP $934,224Annual rental payment, in arrears (commencing 30/6/2020) $300,000Residual value at end of the lease term $157,594Residual guaranteed by lessee $127,594Interest rate implicit in lease 6%The lease is cancellable only with the permission of the lessor. Bell Ltd intends to return the processing plant to the lessor at the end of the lease term. The lease has been classified as a finance lease by both the lessee and the lessor.RequiredPrepare the lease receipt schedule for the lessor (show all workingsOn 1 July 2020, Cooper Ltd leased a plastic-moulding machine from Jersey City Ltd. The machine cost Jersey City Ltd $260,000 to manufacture and had a fair value of $302,035 on 1 July 2020. The lease agreement contained the following provisions: Lease term 4 years Annual rental payment, in advance on 1 July each year $81,500 Residual value at end of the lease term $30,000 Residual guaranteed by lessee nil Interest rate implicit in lease 8% The lease is cancellable only with the permission of the lessor. The expected useful life of the machine is 6 years. Cooper Ltd intends to return the machine to the lessor at the end of the lease term. Included in the annual rental payment is an amount of $1500 to cover the costs of maintenance and insurance paid for by the lessor. Instructions: a)Explain why the lease should be classified as a finance lease by both lessee and lessor based on the guidance provided in Accounting standard. b) Prepare the lease payment schedule for the lessee (show…On 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on 1 July 2020 for its fair value of $467 112. The lease agreement contained the following provisions: Lease term 3 years Economic terms of the plant 5 years Annual rental payments, in arrears (commencing 30?6/2021) $150,000 Residual value at the end of lease term $90,000 Residual guaranteed by lessee $60,000 Interest rate implicit in lease 7% The lease is cancellable only with the permission of the lessor Holmes Ltd intends to return the processing plant to Sherlock Ltd at the end of the lease term. The lease has been classified as a finance lease by Sherlock Ltd. Required: Prepare: (a) the lease receipts schedule for Sherlock Ltd (show all workings) (b) the journal entries in the records of Sherlock Ltd for the year ended 30 June 2022 please show all workings of lease receipt.
- On 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on 1 July 2020 for its fair value of $467 112. The lease agreement contained the following provisions: Lease term 3 years Economic terms of the plant 5 years Annual rental payments, in arrears (commencing 30?6/2021) $150,000 Residual value at the end of lease term $90,000 Residual guaranteed by lessee $60,000 Interest rate implicit in lease 7% The lease is cancellable only with the permission of the lessor Holmes Ltd intends to return the processing plant to Sherlock Ltd at the end of the lease term. The lease has been classified as a finance lease by Sherlock Ltd. Required: 1. Prepare: (a) the lease payments schedule for Holmes Ltd (show all workings) (b) the journal entries in the records of Holmes Ltd for the year ended 30 June 2022. 2. Prepare: (a) the lease receipts schedule for Sherlock Ltd (show…On 1 March 2020,the company entered into a lease agreement in order to lease a manufacturing machine with a costprice of R250 000 (VAT inclusive). The period of the lease is five years, and the useful life of the machinery is estimatedat six years. The following is an extract from the lease agreement:4.1.1 Ownership of the machinery will be transferred to the Lessee at the end of the lease.4.1.2 Should the Lessee cancel the lease, the Lessor’s losses will be borne by the Lessee.Monthly instalments are payable in arrears and amount to R5 947 (VAT inclusive). The company used themanufacturing machine for a qualifying purpose. The company is a registered VAT vendor.Required:Provide the deferred tax movement per the balance sheet method for the lease agreement for the financial year ending31 December 2021. Clearly indicate whether the movement represents an income or an expense. Note:- Show all calculations, marks are awarded for calculations.- You may round off to the nearest Rand.On 1 July 2022, Moose Ltd leased a plastic-moulding machine from Wolf Ltd. On 1 July 2022 the machine was in the records of Wolf Ltd at its fair value of $75 000. The lease agreement contained the following provisions. Lease term 4 years Annual rental payment, in advance on 1 July each year $20 750 Residual value at end of the lease term $7 000 Residual guaranteed by lessee $4 000 Interest rate implicit in lease 8% The machine will be depreciated by Moose Ltd on a straight-line basis. The expected useful life of the machine is 5 years. Moose Ltd intends to return the machine to the Wolf Ltd at the end of the lease term. The lease has been classified as a finance lease by Wolf Ltd. Included in the annual rental payment is an amount of $750 to cover the costs of maintenance and insurance paid for by the lessor. Initial direct costs for setting up the lease were incurred by both parties: $1 518 for Moose Ltd and $1 687 for Wolf Ltd. Required: Prepare…