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E 15?5: Sales-type lease; lessor LO15?6 - Manufac...

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E 15?5: Sales-type lease; lessor LO15?6 - Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2013. International Machines manufactured the equipment at a cost of $85,000. Required: 1. Show how International Machines determined the $15,000 quarterly rental payments. 2. Prepare appropriate entries for International Machines to record the lease at its inception, January 1, 2013, and the second rental payment on April 1, 2013. E 15?8: Capital lease; lessee; balance sheet and income statement effects On June 30, 2013, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2013. Georgia-Atlantic?s incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The fair value of the warehouse is $3 million. Required: 1. Determine the present value of the lease payments at June 30, 2013 (to the nearest $000) that Georgia-Atlantic uses to record the leased asset and lease liability. 2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2013? 3. What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2013?

 

Paper#3467 | Written in 18-Jul-2015

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