The following facts pertain to a non-cancelable lease agreement between Lennox Leasing
The following facts pertain to a non-cancelable lease agreement between Lennox Leasing
Company and Gill Compan y , a lessee. (Round all numbers to the nea r est cent.)
Inception date: May 1, 2014
Annual lease payment due at the beginning of each year, beginning with May 1, 2014: $18,829.49
Bargain-purchase option price at end of lease term: $4,000.00
Lease term: 5 years
Economic life of leased equipment: 10 years
Lessor ’s cost: $65,000.00; fair value of asset at May 1, 2014, $81,000.00
Lessor ’s implicit rate: 10%; lessee’s incremental borrowing rate 10% The lessee assumes responsibility for all executory costs.
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Instructions
(a)Â Discuss the nature of this lease to Gill Company.
(b) Discuss the natu r e of this lease to Lennox Compan y .
(c) P r epa r e a lease amortization schedule for Gill Company for the 5-year lease term.
(d) P r epa r e the journal entries on the lessee’s books to r eflect the signing of the lease ag r eement and to
r eco r d the payments and expenses r elated to this lease for the years 2014 and 2015. Gill’s annual
accounting period ends on December 31. Reversing entries a r e used by Gill.
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Answers
Status NEW
Posted 16 May 2017 09:05 AM
My Price 15.00
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Attachments
file 1494925914-739362_1_636304701621541187_739362.xlsx preview (380 words )
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