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D105 Intermediate Accounting III PA Leave the first rating Students also studied Terms in this set (34) Western Governors UniversityD 217 Save D217 Accounting Information Syste...226 terms vanessa_harris263 Preview D105 64 terms ericblake1999 Preview D215 Auditing WGU All Chapter Quiz...336 terms Sav2215Preview Pre-Ass 70 terms nee Which journal entry should the lessee use to record the first year's payment?Debit Interest Expense; Debit Lease Liability; Credit Cash Company A leases a piece of machinery to Company B on January 1, Year 1. Information pertaining to the lease is
as follows:
The lease is non-cancellable with a term of three years.The machinery has a cost and fair value at the start of the lease of $60,000; an estimated economic life of five years; and a residual value at the end of the lease of $10,000 (unguaranteed).The lease contains no renewal options, and the machinery reverts to Company A at the end of the lease.The present value of the residual is $8,396.How much should Company B record as the right of use asset on January 1, Year 1?$51,604 (60,000-8396) (Cost-present value of residual value) A lessor leases a piece of equipment to a lessee, under lease terms that qualify as an operating lease. The lease terms call for total cash rental payments over the life of the lease of $200,000. The present value of those rental payments is $160,000. The estimated residual value of the leased asset is $20,000. The present value of the residual is $16,000.Which amount of lease receivable, if any, should the lessor record?$0
A lessee leases a piece of equipment from a lessor, under lease terms that qualify as an operating lease. The present value of required rental payments is $280,000, and the present value of the estimated residual value, which is unguaranteed, is $30,000. The lessor incurred total costs of $160,000 to build the leased asset.Which amount of lease liability should the lessee record?$280,000 (Present value of rental payments) The present value of the sum of five annual lease payments for a $10,000 equipment lease is $9,689.54. The lease is an operating lease on a depreciating asset and has an unguaranteed residual value.What is the debit for the yearly journal entry to record depreciation for the lessor?Depreciation Expense $2,000 ($10,000/5) (Total lease sum / years) A lessee has two finance leases. Both leases are for assets with the same fair value, residual value, and useful life where the expected value of the residual value is less than the guaranteed residual value. Asset A has a guaranteed residual value, and Asset B has an unguaranteed residual value.Which statement about these assets is accurate?The original lease liability is greater for Asset A than Asset B.A corporation entered into an agreement to lease a backhoe for ten months. Although the lease agreement provides the option to renew the lease term for an additional three months, the corporation is certain that it will not exercise the renewal option.What is a valid option for the corporation's accounting treatment of this lease?The corporation will treat lease payments as expenses when incurred.(It will treat as an operating lease) Company A (lessee) enters into a lease agreement with Company B (lessor). The term of the lease is five years with monthly payments of $1,500. Prior to the beginning of the lease, Company A paid $9,000 in advance.Which adjustment should be made by Company A to the value of the right-of-use asset?Increased by $9,000 (what you have paid is your right of use) Company A needs to lease scaffolding for nine months. It enters into an agreement to lease the scaffolding for six months, with an option to extend the term for up to nine additional months in increments of three months. It expects to complete the project in nine months.How should the company record the lease?Expense the lease payments as they are incurred.These are short term and are an operating lease so these need to be expensed instead of amortized
A construction company leases dump trucks rather than purchasing them outright. The accountant for the company evaluates the leases, determines that they are finance leases, and then records the transaction on the income statement in the appropriate account.Which account should the accountant use for this purpose?Amortization Expense Finance leases basically replace the need for purchasing outright. This means that this cost should be amortized over the life of the loan Which transaction should be included in the financing activities section of the statement of cash flows?Payment of cash dividends Which transaction should be included in the investing activities section of the statement of cash flows?Payment of cash for equipment What should a statement of cash flows be used for? It determines the reasons for the differences between net income and cash flow.Which item should be included in the investing section of the statement of cash flows?Making a loan A board of directors for a company would like to see how much cash was raised from issuing bonds during the last quarter. Where is this information found on the statement of cash flows?Financing activities
*A company reports the following financial information:
Payment on accounts payable
$ 10,000
O Gain on the sale of equipment
$ 4,000
O Collection of accounts receivable
$ 20,000
O Issuance of bonds payable for cash
$ 100,000
F Purchase of treasury stock
$ 35,000
F Purchase of investment stock
$ 43,000
I Purchase of equipment
$ 40,000
I Issuance of common stock for cash
$ 34,000
F Receipt of cash dividends
$ 13,000
O Receipt of cash interest
$ 23,000
O Payment of cash interest
$ 16,000
O Payment of cash dividends
$ 12,000
F Decrease of $51,000 -Purchase of investment stock
$ 43,000
-Purchase of equipment
$ 40,000
-Cash proceeds from sale of equipment
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