Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Absolute Leasing, Inc. agrees to lease equipment to Allen, Inc. on January 1, 2012. They agree on the following terms:

1) The normal selling price of the equipment is $1,500,000 and the cost of the asset to Absolute Leasing, Inc. was $1,350,000.

2) At the end of the lease, the equipment will revert to Absolute Leasing, Inc. and have an unguaranteed residual value of $100,000. Their implicit interest rate is 10%.

3) The lease is noncancelable with no renewal option. The lease term is 10 years (the same as the estimated economic life).

4) Absolute Leasing, Inc. incurred costs of $9,000 in negotiating and closing the lease. There are no uncertainties regarding additional costs yet to be incurred and the collectability of the lease payments is reasonably predictable.

5) The lease begins on January 1, 2012 and payments will be in equal annual installments.

6) Allen will pay all maintenance, insurance, and tax costs directly and annual payments of $140,000 on January 1 of each year.

Required:

a) Determine what type of lease this would be for the lessee and find out the initial obligation.

b) Prepare Allen, Inc.'s amortization schedule for the lease terms.

c) Prepare all the journal entries for Allen, Inc. for 2012. Assume a calendar year fiscal year.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M946137

Have any Question? 


Related Questions in Accounting Basics

Decide upon an initiative you want to implement that would

Decide upon an initiative you want to implement that would increase sales over the next five years, (for example, market another product, corporate expansion, and so on). Using the sample financial statements, create pro ...

Accounting essayypou must identify a company that has

Accounting essay YPou must identify a company that has implemented "LEAN" or "Lean Six Sigma" technology in their organization. Clearly Identify the fundamental difference between LEAN and Six Sigma. Be certain to includ ...

Account assignmentlets use this discussion to study bonds

Account Assignment Let's use this discussion to study bonds together. Assume the following information for a bond issue: ABC Company issues the bonds at a face value of $10,000.000 with a contractual (stated) interest ra ...

Assignemntpart 11the type of business organization that can

Assignemnt Part 1 1. The type of business organization that can continue indefinitely is known as a: a. sole proprietorship. b. partnership. c. corporation. d. None of the above answers are correct. 2. The purpose of the ...

Government and nonprofit accountingyour portfolio project

Government and Nonprofit Accounting Your Portfolio Project will provide specific answers to the questions that follow. Apply what you have learned in this course to your answers to these questions. Scenario A Is fund acc ...

Abc stock has a share price of 150 today all rates of

ABC stock has a share price of $150 today. All rates of interest are 3% per annum on a continuously compounded basis. A one-year European call option on one share of stock struck at $147 is worth $15. Finally, ABC is sch ...

Questionin order to complete this project it will be

Question In order to complete this project, it will be necessary for you to access the FASB Codification website through the American Accounting Association. You may login at http://aaahq.org/ascLogin.cfm using the follo ...

Accounting questionfollowing the completion of the

Accounting Question: Following the completion of the investigation of a potential fraud case, you are informed by your manager that the case will be brought to trial. As part of the litigation process you will be asked t ...

Case title the website launchyour company meddevice inc has

Case Title: The Website Launch Your Company, MedDevice, Inc., has just received FDA 510(k) clearance of its new, cutting edge medical device which paves the way for the official product launch in a few short months. Your ...

Accounting assignmentgrant film products wishes to expand

Accounting Assignment Grant Film Products wishes to expand and has borrowed $100,000. As a condition for making this loan, the bank requires that the business maintain a current ratio of at least 1.50. Business has been ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen