Question

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 beginning of each year, and Kingston's incremental borrowing rate is 6%, which is the same as the lessor's implicit rate.

Homework Answers

Answer #1

Hi

Let me know in case you face any issue:

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

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...
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...
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...
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...
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...
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...
Pharoah Company leases a building to Shamrock, Inc. on January 1, 2020. The following facts pertain...
Pharoah Company leases a building to Shamrock, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $4,910 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $23,500, a book value to...
On January 1, 2017, the Millwork Company signed a four-year non-cancelable lease of equipment from the...
On January 1, 2017, the Millwork Company signed a four-year non-cancelable lease of equipment from the Midford Company. The annual lease payments of $35,000 are to be paid on January 1 of each year. The first payment is due on January 1, 2017. The lease contains a bargain purchase option price of $15,000. The equipment's fair value is expected to be $30,000 on December 31, 2020. The estimated economic life of the equipment is six years, and the estimated residual...
On January 1, 2017 Baggins Co. leases gardening equipment to Gamgee Inc. The details are as...
On January 1, 2017 Baggins Co. leases gardening equipment to Gamgee Inc. The details are as follows: The lease has a non-cancelable term of 6 years. Ownership is not transferred, there is no purchase option, and the asset is not specialized in nature. Collectability of payments is probable. The core has a fair value of $245,000, a book value of $200,000, a useful life of 9 years, and a salvage value of $4,000. At the end of the lease term,...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT