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Question;Week Seven - Homework Exercises E15-1, E15-3, E15-4, E15-5;E15-8;E15-1 On January 1;2013, Nath-Langstrom Services, Inc., a computer software training firm, leased;several computers from ComputerWorld Corporation under a two-year operating;lease agreement. The contract calls for four rent payments of $10,000 each;payable semiannually on June 30 and December 31 each year. The computers were acquired;by ComputerWorld at a cost of $90,000 and were expected to have a useful life;of six years with no residual value.;Reguired: Prepare;the appropriate entries for both (a) the lessee and (b) the lessor from the;inception of the lease through the end of 2013. (Use straight-line;depreciation.);E15-3 "(Note;Exercises 15?3, 15?4, and 15?5 are three variations of the same basic;situation.);Manufacturers Southern leased high-tech electronic equipment;from Edison Leasing on January 1, 2013. Edison purchased the equipment from;International Machines at a cost of $112,080.;Related Information;Lease term 2 years (8 quarterly periods);Quarterly rental;payments $15,000 at the beginning of each period;Economic life of;asset 2 years;Fair value of asset $112,080;Implicit interest;rate 8%;(Also lessee's;incremental borrowing rate);Required: Prepare a lease amortization schedule and;appropriate entries for Manufacturers Southern from the inception of the lease;through January 1, 2014. Depreciation is recorded at the end of each fiscal;year (December 31) on a straight-line basis.;E15-4 Edison;Leasing leased high-tech electronic equipment to Manufacturers Southern on;January 1, 2013. Edison purchased the equipment from International Machines at;a cost of $112,080.;Related Information;Lease term 2 years (8 quarterly periods);Quarterly rental;payments $15,000 at the beginning of each period;Economic life of;asset 2 years;Fair value of asset $112,080;Implicit interest;rate 8%;(Also lessee's;incremental borrowing rate);Required: Prepare a lease amortization schedule;and appropriate entries for Edison Leasing from the inception of the lease;through January 1, 2014. Edison?s fiscal year ends December 31.;E15-5 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.;Related Information;Lease term 2 years (8 quarterly periods);Quarterly rental;payments $15,000 at the beginning of each period;Economic life of;asset 2 years;Fair value of asset $112,080;Implicit interest;rate 8%;(Also lessee's;incremental borrowing rate);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.;E15-8 "(Note;Exercises 15?8, 15?9, and 15?10 are three variations of the same situation.);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#38690 | Written in 18-Jul-2015

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