Question;Problem;1;Kingdom Leasing Inc.;agrees to lease jousting equipment to Knight Inc. on Jan 1, 2014. They agree on the following terms;1) The normal selling;price of the jousting equipment is $410,000 and the cost of the asset to;Kingdom Leasing Inc. was $250000.;2) Knight will pay all;maintenance, insurance and taxes costs directly and annual payments of $60000;on Jan 1 each year.;3) The lease begins on;Jan 1, 2014 and payments will be in equal annual installments.;4) The lease is;noncancelable with no renewal option. The;lease term is 10 years (the same as the estimated economic life).;5) At the end of the;lease, the jousting ring will revert to Kingdom Leasing Inc. and have an;unguaranteed residual value of $30000.;Their implicit interest rate is 10%.;6) Kingdom Leasing;Inc. Incurred costs of $6500 in;negotiating and closing the lease.;There are no uncertainties regarding additional costs yet to be;incurred and the collectability of the lease payments is reasonably;predictable.;Required;a) Determine what type;of lease this would be for Kingdom;Leasing Inc. and calculate the following: (show all work);Lease;Receivable;Sales;Price;Cost;of Sales;b) Prepare Kingdom's;amortization schedule for the lease terms.;c) Prepare all the;journal entries for Kingdom for 2014.;Assume a calendar year fiscal year.;Problem 2;Use the data given in Problem;# 1 and answer the required questions to record the lease in the Knight;Inc.?s books;Required;a) Determine what type;of lease this would be for the lessee and calculate the initial obligation.;b) Prepare Knight;Inc.'s amortization schedule for the lease terms.;c) Prepare all the;journal entries for Knight Inc. for 2014.;Assume a calendar year fiscal year.
Paper#40217 | Written in 18-Jul-2015Price : $35