How much is the rental calculation made by the lessor

Assignment Help Financial Accounting

Reference no: EM133327231

Case: On January 1, 2020 PT Cika Rang rented a tractor from PT Kara Wang. Agreement clause as following:

1. The nature of the noncancellable rental agreement for 6 years.

2. Rent payments are made by PT Cika Rang at the beginning of each year (annuity-due basis).

3. The fair value (NW) of the assets is IDR 800 million, the economic life is 7 years, and the guaranteed residual value is IDR 100 million.

4. PT Cika Rang determines the expected value of assets at the end of the lease period of IDR 125 million.

5. There is no option to extend the lease period, and at the end of the lease the tractor is returned to PT Kara Wang.

6. PT Iva's incremental interest rate is 7% per year.

7. PT Cika Rang depreciates the equipment using the Straight Line Method. 8. PT Kara Wang determines an annual rental rate that yields an 8% rate of return per year, and this is understood by PT Cika Rang.

Question for PT Kara Wang (lessor):

Question 1. How much is the rental calculation made by the Lessor (PT Kara Wang-Lessor--) to be billed to PT Cika Rang (Leaseee - Lessee--)

Question for PT Cika Rang (Lessee):

Question 1. Make an amortization list

Question 2. Make a journal on January 1, 2020

Question 3. Make a journal on December 31, 2020

(interest expense and depreciation expense)

Question 4. Make a journal at the end of the rental period if PT Cika Rang buys the goods 5. What if PT Cika Rang packs the goods to PT Kara Wang at the end of the period rent..?

Question 6. What if PT Cika Rang estimates the residual value to be IDR 80 million:

a. How much additional rupiah must PT Cika Rang pay PT Kara Wang?

b. What is the value of the leasing asset (Right of Use Asset) that must be amortized?

c. Make a journal for January 1 and December 31, 2020

Reference no: EM133327231

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