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winston industries and ewing inc enter into an agr...

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winston industries and ewing inc enter into an agreement that requires ewing unc to build three diesel electric engines to winstons specifications. Upon completion of the engines winston has agreed tolease them for a period of 10 years and to assume all costs and risks of ownership. The lease is noncancelable, becomes effective on January 012011 and requires annyal rental payments of $413971 each January1 starting January 012011. Winstons incremental borrowing rate is 10%. The implicit interest rate used by Ewing and known to Winston is 8%. The total cost of building the three engines is $2600000. The economic life of the engines is 10 Years with residual value set at zero. Winstopn depreciates similar equipment on a straightline basis. At the end of the lease winsont assumes title to the engines. Collectibility of the lease payments is reasonably certain; no uncertanties ezxist relative tounreimbursable lessor costs. A prepare journal entry to record transaction on January 012011 on the books of winston B.prepare journal entry to record transaction on January 012011 on the books of Ewing. C. prepare the journal entries for the lessee and lessor to reocrd the first rental opayment D.prepare journal entries for lessee and lessor to record interest exzpense(revenue)at dec 31 2011 E show the items and amounts that woul be reported on the balance sheet.,Can you show the math so Iunerstand it? Thank you!! :)

 

Paper#6309 | Written in 18-Jul-2015

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