Question

PROBLEM 4 On Dec 31, 2018, Malton Corporation signed a five-year noncancelable lease for equipment from...

PROBLEM 4

On Dec 31, 2018, Malton Corporation signed a five-year noncancelable lease for equipment from Brampton. The terms of the lease called for Malton to make annual payments of $50,000 each Dec 31, beginning with Dec 31, 2018, for five years with the equipment going back to the lessor at the end of this period. The equipment has an estimated useful life of 5 years and no salvage value. Malton accordingly accounts for this lease transaction as a finance lease. The minimum lease payments were determined to have a present value of $208,493 at an effective interest rate of 10%. Brampton manufactured the equipment f0r $150,000.

  1. Prepare a lease amortization table for 12/31/18, 12/31/19 & 12/31/20.
  2. Record Malton’s (Lessee) journal entries for 12/31/18 & 12/31/19.

SHOW ALL COMPUTATIONS.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2018, Ogleby Corporation signed a five-year noncancelable lease for equipment. The terms of...
On January 1, 2018, Ogleby Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Ogleby to make annual payments of $180,000 at the beginning of each year for five years with title passing to Ogleby at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Ogleby uses the straight-line method of depreciation for all of its fixed assets. Ogleby accordingly accounts for this lease...
1. On January 1, 2021, Oriole Corporation signed a 5-year noncancelable lease for equipment. The terms...
1. On January 1, 2021, Oriole Corporation signed a 5-year noncancelable lease for equipment. The terms of the lease called for Oriole to make annual payments of $191000 at the beginning of each year for 5 years beginning on January 1, 2021 with the title passing to Oriole at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Oriole uses the straight-line method of depreciation for all of its fixed...
Blackmun Corp signed a 3 year noncancelable lease for certain machinery on Dec 31, 2018. The...
Blackmun Corp signed a 3 year noncancelable lease for certain machinery on Dec 31, 2018. The terms of the lease called for Blackmun Corp to make equal annual payments of $15600 at the end of each year for 3 years, withtitle to pass to Blackmun Corp at the end of this period. The first payment is made one year after the lease is signed on Dec 31, 2018. The machinery has an estimated useful life of 3 years and no...
Blackmun Corp signed a 3 year noncancelable lease for certain machinery on Dec 31, 2018. The...
Blackmun Corp signed a 3 year noncancelable lease for certain machinery on Dec 31, 2018. The terms of the lease called for Blackmun Corp to make equal annual payments of $15600 at the end of each year for 3 years, with title to pass to Blackmun Corp at the end of this period. The first payment is made one year after the lease is signed on Dec 31, 2018. The machinery has an estimated useful life of 3 years and...
On January 1, 2018, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease...
On January 1, 2018, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 14% rate of return for providing long-term financing. The lease agreement specified: Ten annual payments of $61,000 beginning January 1, 2018, the beginning of the lease and each December 31 thereafter through 2026. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $315,158. The lease qualifies as a...
Francisco leased equipment from Julio on December 31, 2018. The lease is a 10-year lease with...
Francisco leased equipment from Julio on December 31, 2018. The lease is a 10-year lease with annual payments of $158,000 due on December 31 of each year beginning December 31, 2018. The present value of the lease payments is $1,130,000. Francisco's incremental borrowing rate is 12% for this type of lease. The implicit rate of 11% is known by the lessee. What should be the balance in Francisco lease liability at December 31, 2019? Multiple Choice $972,000. $920,920. $927,430. $919,420.
On January 1, 2017, Windsor Corporation signed a 5-year noncancelable lease for a machine. The terms...
On January 1, 2017, Windsor Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Windsor to make annual payments of $8,634 at the beginning of each year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Windsor uses the straight-line method of depreciation for all of its plant...
January 1, 2018, Pharoah, Inc. signs a 10-year noncancelable lease agreement to lease a storage building...
January 1, 2018, Pharoah, Inc. signs a 10-year noncancelable lease agreement to lease a storage building from Holt Warehouse Company. Collectibility of lease payments is reasonably predictable and no important uncertainties surround the amount of costs yet to be incurred by the lessor. The following information pertains to this lease agreement.(a) The agreement requires equal rental payments at the beginning each year.(b) The fair value of the building on January 1, 2018 is $6,200,000; however, the book value to Holt...
Lessee leased a machine from Lessor under a 10-year, noncancelable lease. The transaction was properly classified...
Lessee leased a machine from Lessor under a 10-year, noncancelable lease. The transaction was properly classified as a finance lease, and a right-of-use asset and a lease liability of $100,000 were recorded. The $14,900 annual payments made at the end of each lease period were discounted at 8% implicit interest to derive the initial $100,000 amounts. Lessee should record the following interest expense at the end of Years 1 and 2: Please show solution Year 1 Year 2 A. $8,000...
Problem 2 Hood leased equipment from Rowe under a two-year operating lease. Rowe routinely finances equipment...
Problem 2 Hood leased equipment from Rowe under a two-year operating lease. Rowe routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually, on June 30 and December 31 each year. The equipment was acquired by Rowe at a cost of $100,000 and was expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation annually. Required:...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT