Beruflich Dokumente
Kultur Dokumente
LEASES
PROBLEMS
Love Corporation
2013
Dec. 31 Rent receivable 36,000
Rent revenue 36,000
2014
Mar. 1 - Dec. 1 monthly entry
Cash 10,000
Rent revenue 10,000
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Chapter 4 – Leases
Lessee’s Books
2013
Oct. 1 Rent expense 54,000
Cash 54,000
1 Rent expense 30,000
Cash 30,000
Nov. 1 Rent expense 30,000
Cash 30,000
44
Chapter 4 – Leases
(c)
Dec. 31 Accumulated depreciation 1,032,300
Interest expense 16,532*
Finance lease obligation 183,470
Leased automobile 1,232,302
*adjusted; balancing figure
45
Chapter 4 – Leases
(d)
Dec. 31 Loss on finance lease 50,000
Accumulated depreciation 1,032,300
Interest expense 16,532
Finance lease obligation 183,470
Leased automobile 1,232,302
Cash 50,000
(c)
2013
Jan. 1 Leased machine 361,447
Finance lease obligation 361,447
1 Finance Lease Obligation 86,680
Cash 86,680
Dec. 31 Interest expense 27,477
Interest payable 27,477
31 Depreciation expense 72,289
Accumulated depreciation 72,289
361,447/5 years
2014
Jan. 1 Finance lease obligation 59,203
Interest payable 27,477
Cash 86,680
Dec. 31 Interest expense 21,556
Interest payable 21,556
31 Depreciation expense 72,289
Accumulated depreciation 72,289
(d)
Statement of Financial Position 2013 2014
Property, plant and equipment
Leased machine 361,447 361,447
Accumulated depreciation 72,289 144,578
Current liabilities:
Interest payable 27,477 21,556
Finance lease obligation 59,203 65,124
46
Chapter 4 – Leases
Noncurrent liabilities:
Finance lease obligation 215,564 150,440
Income Statement
Interest expense 27,477 21,556
Depreciation expense 72,289 72,289
(d)
12/31/13 Leased equipment 1,011,840
Finance lease obligation 1,011,840
47
Chapter 4 – Leases
(d)
2013
Jan. 1 Leased machinery 741,771
Finance lease obligation 741,771
1 Finance lease obligation 150,000
Cash 150,000
Dec. 31 Interest expense 71,013
Interest payable 71,013
31 Depreciation expense 49,451
Accumulated depreciation 49,451
2014
Jan. 1 Finance lease obligation 78,987
Interest payable 71,013
Cash 150,000
Dec. 31 Interest expense 61,534
Interest payable 61,534
(e)
Dec. 31 Interest expense 25,736
Finance lease obligation 214,264
Accumulated depreciation 247,255
Machinery 494,516
Leased machinery 741,771
Cash 240,000
(f)
Dec. 31 Interest expense 25,736
Finance lease obligation 214,264
Accumulated depreciation 247,255
Loss on finance lease 254,516
Leased machinery 741,771
48
Chapter 4 – Leases
(c)
2013
July 1 Building 4,429,740
Finance lease obligation 4,429,740
2014
July 1 Taxes and insurance expense 50,000
Interest payable 223,784
Interest expense 223,785
Finance lease obligation 252,431
Cash 750,000
Amortization Table
Periodic Applied to Balance of
Date Payment Interest Principal Principal
July 1, 2013 P4,429,740
July 1, 2013 P700,000 - P700,000 3,729,740
July 1, 2014 700,000 P447,569 252,431 3,477,309
July 1, 2015 700,000 417,277 282,723 3,194,586
1 Cash 100,000
Finance lease receivable 100,000
49
Chapter 4 – Leases
50
Chapter 4 – Leases
2014
Jan. 1 Finance lease obligation 91,725
Interest payable 46,207
Cash 137,932
Cash 137,932
Finance lease receivable 137,932
(c)
Partial amortization table
Periodic Reduction in Balance of
Date Payment Interest Principal Principal
April 1, 2013 P539,730
April 1, 2013 80,000 80,000 459,730
April 1, 2014 80,000 36,778 43,222 416,508
April 1, 2015 80,000 33,321 46,679 369,829
51
Chapter 4 – Leases
Ironman
2013
Apr. 1 Equipment 539,730
Finance lease obligation 539,730
2014
Apr. 1 Interest expense (36,778-27,584) 9,194
Interest payable 27,584
Finance lease obligation 43,222
Cash 80,000
1 Cash 80,000
Finance lease receivable 80,000
2014
Apr. 1 Cash 80,000
Finance lease receivable 80,000
52
Chapter 4 – Leases
(f) No difference in journal entries. To the lessor, under the direct finance
lease, it does not matter whether the residual value is guaranteed or
unguaranteed.
1 Cash 175,000
Finance lease receivable 175,000
Dec. 31 Unearned interest revenue 67,397
Interest revenue 67,397
89,862 x 9/12
53
Chapter 4 – Leases
2014
Jan. 1 Interest revenue 67,397
Unearned interest revenue 67,397
Apr. 1 Cash 175,000
Unearned interest revenue 89,862
Finance lease receivable 175,000
Interest revenue 89,862
54
Chapter 4 – Leases
c. Amortization Table
Periodic Reduction in Balance of
Date Payment Interest Principal Principal
Oct. 1, 2013 P3,998,328
Oct. 1, 2013 P850,365 P850,365 3,147,963
Oct. 1, 2014 850,365 P377,756 472,609 2,675,354
Oct. 1, 2015 850,365 321,042 529,323 2,146,031
2013
Oct. 1 Finance lease receivable (850,365 x 6) + 166,300 5,268,490
Cost of goods sold (3,200,000 – 84,248) 3,115,752
Inventory 3,200,000
Sales 3,914,080
Unearned interest revenue 1,270,162
1 Cash 850,365
Finance lease receivable 850,365
55
Chapter 4 – Leases
2014
Oct. 1 Interest payable 91,912
Interest expense 367,646 – 91,912 275,734
Finance lease obligation 482,719
Cash 850,365
56
Chapter 4 – Leases
(b)
2013
July 1 Cash 540,000
Accumulated depreciation 350,000
Equipment 800,000
Gain on sale leaseback 50,000
Unearned profit on sale leaseback 40,000
1 Rent expense 80,000
Cash 80,000
Dec. 31 Prepaid rent 40,000
Rent expense 40,000
31 Unearned profit on sale leaseback 5,000
Profit on sale leaseback 5,000
(40,000/4) x 6/12
(c)
2013
July 1 Cash 400,000
Accumulated depreciation 350,000
Loss on sale leaseback 50,000
Equipment 800,000
1 Rent expense 80,000
Cash 80,000
Dec. 31 Prepaid rent 40,000
Rent expense 40,000
(d)
2013
July 1 Cash 350,000
Accumulated depreciation 350,000
Deferred loss on sale leaseback 100,000
Equipment 800,000
1 Rent expense 80,000
Cash 80,000
Dec. 31 Prepaid rent 40,000
Rent expense 40,000
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Chapter 4 – Leases
Problems
MC25 C 900,000 + (500,000 / 5 yrs) = 1,000,000
MC26 C 40,000 + (125,000 x 4) = 540,000; 540,000 / 5 yrs = 108,000
MC27 D This is an operating lease; thus, there is no interest expense involved.
MC28 D 240,000 x 6/12 = 120,000
MC29 C 3,600,000 / 3 yrs = 1,200,000
MC30 B 3,600,000 x 2/3 = 2,400,000; 600,000 + 900,000 = 1,500,000
2,400,000 – 1,500,000 = 900,000
MC31 B 500,000 x 4.61 = 2,305,000
MC32 D 2,305,000 – 500,000 – 283,400 = 1,521,600;
500,000 – (12% x 1,805,000)=283,400
MC33 A 2,305,000 / 6 = 384,167
MC34 B 1,350,000-200,000=1,150,000; 1,150,000 x 10% = 115,000
200,000-115,000 = 85,000
MC35 B 400,000 x 5.95 = 2,380,000
MC36 D (2,400,000 – 200,000) / 8 yrs = 275,000
MC37 D (1,742,174 x 3.48685) + (1,200,000 x .68301) = 6,894,311
MC38 C (6,894,311 – 1,200,000)/4 = 1,423,578
MC39 A 1,742,174 X 3.48685 = 6,074,699
MC40 D 6,074,699/4 = 1,518,675
MC41 B CV = 6,245,450 – [(6,245,450 – 80,000)/6 X 4 ] = 2,135,150
2,135,150 – 1,250,000 = 885,150
MC42 A 100,000 x 6 = 600,000
MC43 D 100,000 x 4.8 = 480,000; 480,000 – 100,000 = 380,000
380,000 x 10% x 5/12 = 15,833
MC44 C 3,520,000 – 2,800,000 = 720,000
MC45 A 3,520,000 – 600,000 = 2,920,000; 2,920,000 x 10% x 6/12 = 146,000
MC46 B 400,000 – 300,000 – 15,000 + (400,000 X 10%) = 125,000
MC47 D 400,000 – (108,951 – 40,000 interest) = 331,049
MC48 A 323,400 / 4.312 = 75,000; 75,000 x 5 = 375,000; 375,000 – 323,400 = 51,600
MC49 D 98,512 x 10% = 9,851; 30,000-9,851 =20,149; 98,512-20,149=78,363
78,363 x 10% = 7,836
MC50 C (98,512-5,000) / 4 = 23,378
MC51 D (30,000 x 2) + 5,000 = 65,000
MC52 A Initial direct costs increase the net investment in lease recorded by the lessor;
although an unguaranteed residual value is considered by the lessor and not by
the lessee, the terms of the lease already indicated that the residual value is
guaranteed.
MC53 A This excess over the limited hours should be accrued by the end of 2014, even if
payment would be made at January 1, 2015
MC54 D 550,000 – 400,000 =150,000 ; in the absence of any information, sales price is
presumed to be at fair value.
MC55 A 4,800,000 – 3,600,000 = 1,200,000
MC56 B 1,200,000 /12 x 6/12 = 50,000
MC57 B 150,000 – 100,000 = 50,000; 50,000 x 9/10 = 45,000
MC58 B 800,000 – 710,000 = 90,000 deferred on Mar. 31; 710,000 – 650,000 = 60,000
immediate gain on Mar. 31; 60,000 + [(90,000/12) x 9/12] = 65,625
MC59 D If selling price is at fair value, full amount of gain is recognized immediately.
MC60 B Additional information, lease term is 12 years out of total life of 25 years.
Deferred loss = 650,000 – 470,000; amortized loss = (180,000/12) x 9/12 =
11,250; 180,000 – 11,250 = 168,750
58