Question

Kingston Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not...

Kingston Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $35,000 at the beginning of each year, and Kingston’s incremental borrowing rate is 6%, which is the same as the lessor’s implicit rate.


Prepare all the necessary journal entries for Falls Company (the lessor) for 2017, assuming the equipment is carried at a cost of $200,000.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Hi

Let me know in case you face any issue:

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
Grouper Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not...
Grouper Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $36,000 at the beginning of each year, and Kingston’s incremental borrowing rate is 8%, which is...
Pina Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not...
Pina Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Pina’s journal entries on January 1, 2017, and December 31, 2017. Assume the annual lease payment is $37,000 at the...
Brief Exercise 21A-17 Bridgeport Corporation leases equipment from Falls Company on January 1, 2017. The lease...
Brief Exercise 21A-17 Bridgeport Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. The annual lease payment is $43,000 at the beginning of each year, and Kingston’s incremental borrowing rate is...
Ayayai Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not...
Ayayai Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Ayayai’s journal entries on January 1, 2020, and December 31, 2020. Assume the annual lease payment is $43,000 at the...
Blue Corporation leased equipment to Larkspur, Inc. on January 1, 2017. The lease agreement called for...
Blue Corporation leased equipment to Larkspur, Inc. on January 1, 2017. The lease agreement called for annual rental payments of $1,141 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 8 years, a fair value of $9,400, a book value of $7,400, and Blue expects a residual value of $6,900 at the end of the lease term. Blue set the lease payments with the intent of earning a 7% return, though...
Laura Leasing Company signs an agreement on January 1, 2017, to lease equipment to Skysong Company....
Laura Leasing Company signs an agreement on January 1, 2017, to lease equipment to Skysong Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2017, is $56,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset...
Grouper Corporation agrees on January 1, 2017, to lease equipment from Packers, Inc. for 3 years....
Grouper Corporation agrees on January 1, 2017, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease payments of $19,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Assume that...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Sunland Company....
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Sunland Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $71,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset...
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Metlock Company....
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Metlock Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $56,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset...
Skysong Leasing Company signs an agreement on January 1, 2017, to lease equipment to Cole Company....
Skysong Leasing Company signs an agreement on January 1, 2017, to lease equipment to Cole Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. 2. The cost of the asset to the lessor is $230,000. The fair value of the asset at January 1, 2017, is $230,000. 3. The asset will revert to the lessor at the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT