Question

On January 1st a company enters into a capital lease for five years that has a...

On January 1st a company enters into a capital lease for five years that has a present value of $100,000. Rent is $5000 prr month starting on Jan 31st. Proper accounting for this transaction is what?
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Under capital lease, the lessor finances the leased assets and all the rights of ownership transfers to the lessee. Hence, the lessee shall record the property as its own asset i.e. leased asset.

The property entry on Jan 1st shall be,

Leased Asset…. Dr        $ 100,000

            Leased liability                    $ 100,000

(TO record asset taken on capital lease)

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
Lessee Company enters into a lease on January 1, 2021, that is accounted for as a...
Lessee Company enters into a lease on January 1, 2021, that is accounted for as a finance lease. The lease calls for quarterly payments of $20,000, beginning on January 1, 2021, and continuing for 5 years. The last payment is due on October 1, 2025. The lease has an implicit annual interest rate of 9%. The present value of an annuity due at 9% per period for 5 periods is 4.240; the present value of an annuity due at 2.25%...
. Eubank Company, as the lessee, enters into a lease agreement on January 1, 2020, for...
. Eubank Company, as the lessee, enters into a lease agreement on January 1, 2020, for equipment. The following data are relevant to the lease agreement: 1.   The term of the noncancelable lease is 4 years. Payments of $978,446 are due on January 1 of each year. 2.   The fair value of the equipment on January 1, 2020 is $3,6000,000. The equipment has an economic life of 6 years with no salvage value. 3.   Eubank depreciates similar machinery it owns...
Company A enters into a lease agreement as lessor on january 1, 2016. the term of...
Company A enters into a lease agreement as lessor on january 1, 2016. the term of the noncancelable lease is 10 years and payment are required at the end of each year. the following information relates to this agreement: 1. Lessee has the option to purchase the asset for $12000 when the lease expires at which time the fair value is expected to be $30000 2. The asset has a cost of $100,000, an estimated useful life of 15 years,...
(a) On 1st April 2017, a company issued OMR 100,000, 10 years, 5% bonds at face...
(a) On 1st April 2017, a company issued OMR 100,000, 10 years, 5% bonds at face value. Interest is payable on 1st January and 1st July every year. 31st December is the year end date for the company. Pass journal entries for the issue of bond and interest for the year ending on 31st December, 2017.
On January 1st 2020, Century Inc. paid rent company $48,000 for 2 years’ worth of rent...
On January 1st 2020, Century Inc. paid rent company $48,000 for 2 years’ worth of rent in advance. Century Inc. prepares quarterly financial statements at the end of every March, June, September, and December; provide the following for Century Inc.: 1) January 1st 2020 initial transactional entries 2) December 31st 2020 adjusting entries 3) If Century Inc. prepares financial statements only once a year, what would be the adjusting entries on December 31st 2020 Please explain how do you get...
Assume a tenant has a rent starting at $11psf for a lease term of five years....
Assume a tenant has a rent starting at $11psf for a lease term of five years. The rent increases by $1.50psf each year. What is the average rent over the term? Group of answer choices $12.50 $14.00 $17.00 $15.50 $11.00
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...
We want to determine the Value of a levered firm on January 1st, 2021. The company...
We want to determine the Value of a levered firm on January 1st, 2021. The company is expected to generate an EBIT of $400,000 on December 31st, 2021. The net working capital is not expected to increase and the depreciation expenses will equal capital expenditures. We also know that the company will distribute a dividend per share of $6 at the end of the year and that the growth rate of the earnings and dividends is 6%. The price per...
Recording Finance Lease Journal Entries— Purchase Option Lessee Company enters into a 6-year finance lease of...
Recording Finance Lease Journal Entries— Purchase Option Lessee Company enters into a 6-year finance lease of non-specialized equipment with Lessor Company on January 1, 2020. Lessee has agreed to pay $28,000 annually beginning immediately on January 1, 2020. The lease includes an option for the lessee to purchase the equipment at $3,000, which is $2,000 below the estimated fair value at lease end. Lessee Company is reasonably certain that it will exercise the purchase option. The economic life of the...
Please answer all a,b,c! Eubank Company, as lessee, enters into a capitalized lease agreement on January...
Please answer all a,b,c! Eubank Company, as lessee, enters into a capitalized lease agreement on January 1, 2018, for equipment. The following data are relevant to the lease agreement: The term of the non-cancelable lease is 4 years with no renewal option. Payments of $782,757 are made at the beginning of each year. The present value of the minimum lease payments equals $2,800,000. The fair value of the equipment on 1/1/18 is $2,800,000. The equipment has an economic life of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT