On June 30, 2018, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the leaserequire Fly-By-Night to make 20 annual payments of $400,000 on each June 30. Generally accepted accountingprinciples require this lease to be recorded as a liability for the present value of scheduled payments. Assume thata 7% interest rate properly reflects the time value of money in this situation.Required:1. At what amount should Fly-By-Night record the lease liability on June 30, 2018, assuming that the first payment will be made on June 30, 2019?2. At what amount should Fly-By-Night record the lease liability on June 30, 2018, before any payments aremade, assuming that the first payment will be made on June 30, 2018?

On June 30, 2018, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the leaserequire Fly-By-Night to make 20 annual payments of $400,000 on each June 30. Generally accepted accountingprinciples require this lease to be recorded as a liability for the present value of scheduled payments. Assume thata 7% interest rate properly reflects the time value of money in this situation.Required:1. At what amount should Fly-By-Night record the lease liability on June 30, 2018, assuming that the first payment will be made on June 30, 2019?2. At what amount should Fly-By-Night record the lease liability on June 30, 2018, before any payments aremade, assuming that the first payment will be made on June 30, 2018?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 5RE: Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the...

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On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $400,000 on each June 30. Generally accepted accounting principles require this lease to be recorded as a liability for the present value of scheduled payments. Assume that a 7% interest rate properly reflects the time value of money in this situation.Required:1. At what amount should Fly-By-Night record the lease liability on June 30, 2021, assuming that the first payment will be made on June 30, 2022?2. At what amount should Fly-By-Night record the lease liability on June 30, 2021, before any payments are made, assuming that the first payment will be made on June 30, 2021?
Help Save & Ex On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $140,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,405,261 lease liability. Required: Determine the interest rate implicit in the lease agreement. Note: Use tables, Excel, or a financial calculator. Round your answer to 1 decimal place. (FV of $1, PV of $1, EVA of $1, PVA of $1, EVAD of $1 and PVAD of $1) Interest rate implicit %
On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $125,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,214,031 lease liability. Required: Determine the interest rate implicit in the lease agreement. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Interest rate implicit % 2
On June 30, 2016, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $400,000 on each June 30. Generally accepted accounting principles require this lease to be recorded as a liability for the present value of scheduled payments. Assume that a 7% interest rate properly reflects the time value of money in this situation. Required: 1. At what amount should Fly-By-Night record the lease liability on June 30, 2016, assuming that the first payment will be made on June 30, 2017? 2. At what amount should Fly-By-Night record the lease liability on June 30, 2016, before any payments are made, assuming that the first payment will be made on June 30, 2016?
19 On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $125,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,214,031 lease liability. Determine the interest rate implicit in the lease agreement. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
On January 1, 2021, Flackmon Company entered into a lease for a truck with a payment of S16,000 per year for 4 years. The expected life of the truck is 5 years, and the first payment will be made immediately. Flackmon could obtain a loan for a similar amount at a rate of 8% per year. Required: A. Record the lease liability and the first payment on January 1, 2021. B. Record the amortization on the leased asset for 2021. C. Record interest for 2021 on the lease. D. Record the lease payment on January 1, 2022. Your answers to this open-ended assignment should be placed in the space below this line. A Date Account Name Debit Credit Jan. 1, 2021 1-Jan-21 B Date Account Name Debit Credit Dec. 31, 2021 C Date Account Name Debit Credit Dec. 31, 2021 D Date Account Name Debit Credit Jan. 1, 2022
On January 1, 2024, Harlon Consulting entered into a three-year lease for new office space agreeing to lease payments of: $12,700 In 2024, $9,800 in 2025 and $6,900 in 2026. Payments are due on December 31 of each year with the first payment being made on December 31, 2024. Harlon is aware that the lessor used a 6% Interest rate when calculating lease payments. Required: 1-4. Prepare the appropriate entries for Harlon Consulting on January 1, 2024, December 31, 2024, 2025 and 2026 to record the lease. Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. Round your Intermediate and final answers to nearest whole dollar. (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) No 1 2 3 4 5 6 7 Date January 01, 2024 Right-of-use asset Lease payable December 31, 202 Interest expense Lease payable Cash December 31, 203 Amortization expense Right-of-use asset December…
20. On June 30, 2021, Fly-By-Night Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require Fly-By-Night to make 20 annual payments of $1,700,000 on each June 30. Generally accepted accounting principles require this lease to be recorded as a liability for the present value of scheduled payments. Assume that a 7% interest rate properly reflects the time value of money in this situation. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:1. At what amount should Fly-By-Night record the lease liability on June 30, 2021, assuming that the first payment will be made on June 30, 2022?2. At what amount should Fly-By-Night record the lease liability on June 30, 2021, before any payments are made, assuming that the first payment will be made on June 30, 2021?
2. On June 30, 2021, Marketplace Company leased a machine from Air Leasing. The contract requires Marketplace to make semiannual lease payments of $229,400 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Marketplace’s incremental borrowing rate is 12%, the same rate used to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. Air constructed the machine at a cost of $1,259,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:1. Determine the price at which Air is “selling” the machine (present value of the lease payments) at June 30, 2021.2. What would be the amounts related to the lease that Air would report in its balance sheet at December 31, 2021? (Ignore taxes.)3. What would be the amounts related to the lease that Air would report in its income statement for the year ended…
On January 1, 2021, Company A (lessor) enters into a lease of equipment with Company B. Information on the lease is as follows: Cost of equipment - P320,183 Useful life of equipment - 5 years Lease term - 4 years Annual rental payable at the beginning of each year? Company A incurred initial direct costs of P20,000 in negotiating the lease. The implicit interest rate is 12%. How much is the annual rent?
On January 1,2024, Lowe's Inc. entered into a lease agreement with Traveler Inc. to lease a car for 3 years. The lease is accounted for as a finance lease and $5,000 in lease payments are due at at the beginning of the period starting January 1, 2024 and on December 31 of each year thereafter. There is no residual value. The rate implicit in the lease is 8%. On December 31, 2024, what entry (or entries) will Lowe's record regarding the lease? The present value of an annuity due at 8% for 3 years is 2.78326. (Round to whole dollars) OA. OB. OIC. O D. Lease expense Lease liability Right of use asset Interest expense Lease liability Cash Amortization expense Right-of-use asset Interest expense Lease liability Amortization expense Right-of-use asset Interest expense Lease liability Cash Debit 5,000 Debit 713 4,287 4,639 Debit 713 4,295 Debit 713 4,287 Credit 1031 3,969 Credit 5,000 4,639 Credit 713 4,295 Credit 5,000 A
On June 1, 2024, First National leased a building. The lease agreement calls for First National to make lease payments of $3,627.06 each month for the next two years, with the first lease payment beginning June 30. The company's normal borrowing rate is 79%. Required: 1. Calculate the present value of the lease payments. (Hint: Use a financial calculator or Excel.) 2. Record the lease on June 1, 2024. Complete this question by entering your answers in the tabs below.