(Answered) Assume that on january 1 2011 elmers restaurants sells a

Accounting

Assume that on January 1, 2011, Elmer's Restaurants sells a computer system to Liquidity Finance Co. for $510,000 and immediately leases the computer system back. The relevant information is as follows.

1. The computer was carried on Elmer's books at a value of $450,000.

2. The term of the non-cancelable lease is 10 years; title will transfer to Elmer.

3. The lease agreement requires equal rental payments of $83,000.11 at the end of each year.

4. The incremental borrowing rate for Elmer is 12%. Elmer is aware that Liquidity Finance Co. set the annual rental to ensure a rate of return of 10%.

5. The computer has a fair value of $680,000 on January 1, 2011, and an estimated economic life of 10 years.

6. Elmer pays executory costs of $9,000 per year. Prepare the journal entries for both the lessee and the lessor for 2011 to reflect the sale-leaseback agreement. No uncertainties exist, and Collectibility is reasonably certain.

View complete question

Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91867965
Price:- $10

Verified Expert

Priced at $20 Now at $10, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Accounting Basics

Question - white mountain sled company manufactured 3000

Question - White Mountain Sled Company manufactured 3,000 Children's snow sleds during November. The following variable overhead data relates to November: Budgeted variable overhead cost per unit $12.00 Actual variable m ...

Question - flounder corporation sold 3490000 7 5-year bonds

Question - Flounder Corporation sold $3,490,000, 7%, 5-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on January 1. Flounder Corporation uses the straight-line method to amortize bo ...

Question - beyer company is considering the purchase of an

Question - Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 9% return ...

Question - last year garrison manufacturing sold 500 000

Question - Last year, Garrison Manufacturing sold 500 000 units at $4 each. Both sales volume and sales price are expected to increase by 15 per cent in the upcoming year. Calculate the expected sales revenue for the upc ...

Question - during fy 2016 alpha company sold 500 units for

Question - During FY 2016, Alpha Company sold 500 units for total sales of $20,000. Manufacturing costs consisted of direct labor $2,500, direct materials $4,400, variable factory overhead $1,100, and fixed factory overh ...

Question - during october a firm had the following

Question - During October a firm had the following transactions involving revenue and expense: Paid $1325 for rent October Provided services foe $3000 in cash Paid 300 for October phone service Provided service for 2150 ...

Question - chopin corporation had these transactions

Question - Chopin Corporation had these transactions pertaining to debt investments: Jan.1 Purchased 90 10%, $1,000 Martine Co. bonds for $90,000 cash. Interest is payable semiannually on July 1 and January 1. July1 Rece ...

Assessment task select two public limited companies listed

Assessment task: Select two public limited companies listed on the Australian Securities Exchange (ASX) that are in the same industry. Go to the website of your selected companies. Then go to the Investor Relations secti ...

Question - the following are reported amounts from ellis

Question - The following are reported amounts from Ellis Company's multiple-step income statement: Cost of merchandise sold $199,840 Merchandise inventory 139,890 Sales 307,750 Sales discounts 5,850 Sales returns 11,690 ...

Assignment - you have been recently employed as an

Assignment - You have been recently employed as an accountant for the Platinum Manufacturing Group. The CEO, Ms James, has tasked you with reviewing their system for the purchase, receipt, storage and issuance of raw mat ...

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

Recent Questions

Ask Accounting Basics Expert