On January 1, 2021, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Allied. The equipment cost Allied $957,600 and has an expected useful life of five years. Allied expects the residual value at December 31, 2024, will be $301,600 Negotiations led to the lessee guaranteeing a $341,600 residual value Equal payments under the finance/sales-type lease are $201.600 and are due on December 31 of each year with the first payment being made on December 31, 2021 Karrier is aware that Allied used a 4% interest rate when calculating lease payments (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 ond PVAD of S) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease. 2. Prepare all appropriate entries for both Karrier and Allied on December 31, 2021, related to the lease
On January 1, 2021, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Allied. The equipment cost Allied $957,600 and has an expected useful life of five years. Allied expects the residual value at December 31, 2024, will be $301,600 Negotiations led to the lessee guaranteeing a $341,600 residual value Equal payments under the finance/sales-type lease are $201.600 and are due on December 31 of each year with the first payment being made on December 31, 2021 Karrier is aware that Allied used a 4% interest rate when calculating lease payments (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 ond PVAD of S) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease. 2. Prepare all appropriate entries for both Karrier and Allied on December 31, 2021, related to the lease
Chapter15: Property Transactions: Nontaxable Exchanges
Section: Chapter Questions
Problem 46P
Related questions
Question
Subject: acounting
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning