Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

E20-2 Lessee Accounting with Payments Made at Beginning of Year


Adden Company signs a lease agreement dated January 1, 2013, that provides for it to lease heavy equipment from Scott Rental Company beginning January 1, 2013. The lease terms, provisions, and related events are as follows:


1. The lease term is 4 years. The lease is noncancelabe and requires annual rental payments of $20,000 each to be paid in advance at the beginning of the year.
2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is $68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time.
3. Adden agrees to pay all executory costs.
4. The lease contains no renewal or bargain purchase option.
5. Scott's interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate.
6. Adden uses the straight line method to record depreciation on similar equipment.
7. Executory costs paid at the end of the year by Adden are:
2013 2014
Insurance, $1,500 Insurance, $1,300
Property Taxes, $6,000 Property Taxes, $5,500
1. Examine and evaluate each capitalization creiteria and determine what type of lease this is for Adden.
2. Prepare a table summarizing the lerase payments and interest expense for Adden.
3. Prepare journal entries for Adden for the years 2013 and 2014.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M945125

Have any Question? 


Related Questions in Accounting Basics

Assignment research applicationin this assignment you will

Assignment: Research Application In this assignment, you will use the Internet and other sources to gather and interpret information related to service and manufacturing organizations. Select either a service or a manufa ...

You are the auditor for a company and need to review the

You are the auditor for a company and need to review the company's accounts receivable using probability proportional to size (PPS) sampling. In addition, the board of directors has requested that you and your team prese ...

Accounting discussion questionbulluse the internet to

Accounting Discussion Question • Use the Internet to research an annual report of a retail company. • Then, imagine you are an investor or creditor; suggest the ratios that you believe would provide an investor or credit ...

Expl principles of accountingdepartment Expl Principles of Accounting Department

Expl Principles of Accounting Department Responsibility • Why should responsibility for related transactions be divided among different departments or individuals? Do you agree the transactions should be divided? Why or ...

Your city has decided to build a new library the projected

Your city has decided to build a new library. The projected cost is $2 million. A bond issue for $1.2 million has been authorized, and the remainder is supposed to come from a contribution of $800,000 from the general fu ...

1 several years ago courtney borrowed 100000 from the

1) Several years ago, Courtney borrowed $100,000 from the Friendly Local Bank and used it to buy an apartment building. Courtney has not been able to rent any of the apartments in the building and has not made any princi ...

Company name is chevronapply ifrs 1 adopting ifrs and rev

Company name is Chevron Apply IFRS 1, "Adopting IFRS" and "Rev Rec" to your U.S. company used in the "Comparison Project" for the final effort in class which is to develop a plan for the transition to both IFRS and Rev R ...

In the wake of the accounting and finance scandals of the

In the wake of the accounting and finance scandals of the early 2000s, the regulatory environment for businesses changed dramatically to create more accountability and transparency. Agencies like the Securities and Excha ...

Assignmentmemos are one-page 750 word minimum single-spaced

Assignment Memos are one-page (750 word minimum) single-spaced essays (no more than 10 font) and are due in the morning on Blackboard before we discuss assigned readings (a physical copy should also be brought to class). ...

Questionson may 5 2006 disney company completed an all

Questions On May 5, 2006, Disney Company completed an all stock acquisition of Pixar, a digital animation studio. Disney believes that the creation of high quality feature animation is a key driver of success across many ...

  • 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