Reference no: EM131110348
Grady Leasing Company signs an agreement on January 1, 2010, to lease equipment to Azure Company. The following information relates to this agreement.
1. The term of the non-cancelable lease is 5 years with no renewal option. The equipment has an estimated economic life of 5 years.
2. The fair value of the asset at January 1, 2010, is $90,000.
3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, none of which is guaranteed.
4. Azure Company assumes direct responsibility for all executory costs, which include the following annual amounts: (1) $900 to Frontier Insurance Company for insurance and (2) $1,600 to Crawford County for property taxes.
5. The agreement requires equal annual rental payments of $20,541.11 to the lessor, beginning onJanuary 1, 2010.
6. The lessee's incremental borrowing rate is 12%. The lessor's implicit rate is 10% and is known to the lessee.
7. Azure Company uses the straight-line depreciation method for all equipment.
8. Azure uses reversing entries when appropriate.
(Round all numbers to the nearest cent.)
(a) Prepare an amortization schedule that would be suitable for the lessee for the lease term.
(b) Prepare all of the journal entries for the lessee for 2010 and 2011 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31.
What is the total amount of payments made over life of loan
: What is the total amount of payments made over the life of the loan? How many years will it take to pay off the loan if you pay an extra $100 per month?
|
Both the lessor and the lessee are on a calendar year basis
: If Secada paid $30,000 to a real estate broker on January 1, 2011, as a fee for finding the lessee, how much should be reported as an expense for this item in 2011 by Secada Co.?
|
What is each country ratio of producing plums and apples
: The accompanying hypothetical production possibilies tables are for New Zealand and Spain. Each country can produce apples and plums. Plot the production possibilities data for each of the two countries separately. Referring to your graphs, answer th..
|
Choice makes arrivals a priori three times
: The morning arrival times for 10 days of a school bus at the Tipperary street pickup stop are 8:05, 8:06, 8:09, 8:12, 8:03, 8:15, 8:11, 8:16, 8:00, and 8:14.
|
Grady leasing company signs an agreement on january
: Azure Company assumes direct responsibility for all executory costs, which include the following annual amounts: (1) $900 to Frontier Insurance Company for insurance and (2) $1,600 to Crawford County for property taxes.
|
Absolute advantage and comparative advantage
: Would like everyone to consider two very important concepts of economics this week: absolute advantage and comparative advantage. Both terms are critical, especially on a macroeconomic level. Countries must think about what they are going to produce ..
|
What percentage of the total assets controlled
: What percentage of the total assets controlled by All-Stores does its common stock equity represent? If a stockholder holds $5,000 worth of All-Stores common stock equity, and this amount gives this stockholder voting control, what percentage of the ..
|
What factors influence firm competitive strategies
: What factors influence a firm's competitive strategies? How does global economic competition affect the price elasticity of demand in the domestic market and decisions r elated to the strategy a firm uses to compete? Why do most economists oppose tra..
|
Children are the age group most likely to live in poverty
: Children are the age group most likely to live in poverty. In any given month, about 20% of children are living in households subsisting below the poverty line. Children make up about 25% of the U.S. population as a whole, but they make up more than ..
|