Analyzing and Interpreting Lease Footnote DisclosuresThe GAP Inc. discloses the following schedule to its fiscal 2018 (ended February 2, 2019) 10-K/report relating to its leasing to its leasing activities.The aggregate minimum noncancelable annual lease payments under leases in effect on February 2, 2019, are as follows:Fiscal Year ($ millions)20192020202120222023$1,1561.098892730539Thereafter1,520Total minimum lease commitments $5,935Compute the present value of GAP's operating leases using a 6% discount rate and round the remaining lease term to the nearest whole year.Round each answer to the nearest whole number.S million Present Value$Year 1Year 2Year 3Year 4Year 5After 5Check$1,091977 ✔749578 ✔403 ✓1.136 x4,934 xYou have correctly selected 5.

When trying to account for the time value of money, present value, or PV, is a concept in finance…

The GAP Inc. discloses the following schedule to its fiscal 2018 (ended February 2, 2019) 10-K/report relating to its leasing to its leasing activities The aggregate minimum noncancelable annual lease payments under leases in effect on February 2, 2019, are as follows: Fiscal Year ($ millions) 2019 2020 2021 2022 2023 Thereafter 1,520 Total minimum lease commitments $5,935 $1,156 1,098 892 730 539 Compute the present value of GAP's operating leases using a 6% discount rate and round the remaining lease term to the nearest whole year. Round each answer to the nearest whole number. S million Present Value Year 1 $ 1.091 Year 2 977 ✓

The GAP Inc. discloses the following schedule to its fiscal 2018 (ended February 2, 2019) 10-K/report relating to its leasing to its leasing activities The aggregate minimum noncancelable annual lease payments under leases in effect on February 2, 2019, are as follows: Fiscal Year ($ millions) 2019 2020 2021 2022 2023 Thereafter 1,520 Total minimum lease commitments $5,935 $1,156 1,098 892 730 539 Compute the present value of GAP's operating leases using a 6% discount rate and round the remaining lease term to the nearest whole year. Round each answer to the nearest whole number. S million Present Value Year 1 $ 1.091 Year 2 977 ✓

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 14E: Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease...

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Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee). Required: 1. Assuming that the lease is a sales-type lease, calculate the selling price. 2. Prepare a table summarizing the lease receipts and interest income earned by Edom. 3. Prepare journal entries for Edom tor the years 2019 and 2020.
Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of 20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is 68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Executory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020.
Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: The lease is noncancelable and has a term of 8 years. The annual rentals arc 35,000, payable at the beginning of each year. The interest rate implicit in the lease is 14%. Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for 1 at the end of the lease term, December 31, 2026. The cost of the equipment to the lessee is 150,000, and the fair value is approximately 185,100. Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Ballieu estimates that the fair value is expected to be significantly greater than 1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of 35,000 discounted at 14% is 185,090.68 (the 1 purchase option is ignored as immaterial). Required: 1. Next Level Identify the classification of the lease transaction from Ballices point of view. Give the reasons for your classification. 2. Prepare all the journal entries tor Ballieu for the years 2019 and 2020. 3. Discuss the disclosure requirements for the lease transaction in Ballices notes to the financial statements.
Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. Assume that Garvey is required to make payments on December 31 each year.
Lessee Accounting Issues Timmer Company signs a lease agreement dated January 1, 2019, that provides for it to lease equipment from Landau Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: The lease is noncancelable and has a term of 5 years. The annual rentals are 83,222.92, payable at the end of each year, and provide Landau with a 12% annual rate of return on its net investment. Timmer agrees to pay all executory costs directly to a third party on December 1 of each year. In 2019, these were insurance, 3,760; property taxes, 5,440. In 2020: insurance, 3,100; property taxes, 5,330. There is no renewal or bargain purchase option. Timmer estimates that the equipment has a fair value of 300,000, an economic life of 5 years, and a zero residual value. Timmers incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment. Required: 1. Calculate the amount of the asset and liability of Timmer at the inception of the lease. (Round to the nearest dollar.) 2. Prepare a table summarizing the lease payments and interest expense. 3. Prepare journal entries on the books of Timmer for 2019 and 2020. 4. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the present value of next years payment approach to classify the finance lease obligation between current and noncurrent. 5. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the change in present value approach to classify the finance lease obligation between current and noncurrent.
Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on the following terms: 1. Twenty-four lease rentals of 2,950 at the beginning of each month are to be paid by Terrell, and the lease is noncancelable. 2. The cost of the heavy equipment to Ramsey was 55,000. 3. Ramsey uses an implicit interest rate of 18% per year and will account for this lease as a sales-type lease. Required: Prepare journal entries for Ramsey (the lessor) to record the lease contract on March 1, 2019, the receipt of the first two lease rentals, and any interest income for March and April 2019. (Round your answers to the nearest dollar.)
Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).
Analyzing and Interpreting Lease Footnote Disclosures The GAP Inc. discloses the following schedule to its fiscal 2018 (ended February 2, 2019) 10-K report relating to its leasing to its leasing activities. The aggregate minimum noncancelable annual lease payments under leases in effect on February 2, 2019, are as follows: Fiscal Year ($ millions) 2019 $1,156 2020 1,098 2021 892 2022 730 2023 539 Thereafter 1,520 Total minimum lease commitments $5,935 Compute the present value of GAP's operating leases using a 6% discount rate and round the remaining lease term to the nearest whole year. Round each answer to the nearest whole number. $ million Present Value Year 1 $ 1,091 Year 2 977 Year 3 749✓ Year 4 578 ✓ Year 5 403 After 5 1,135 x $ 4,904 x
TOPIC: LEASESCompute for the following (show solution):a. Manufacturer's profit recognized in the year 2020.b. Total financial revenue pertaining to the lease.c. Interest Revenue recognized in the year 2020.d. Net Finance lease Receivable balance, December 31, 2020.
Reyes Corp. disclosed the following lease information in its 2019 annual report related to its leasing activities (in millions). Capital Leases Operating leases 2020 $ 307 $ 2,471 2021 286 2,302 2022 262 1,202 2023 251 980 116 830 2024 696 9,130 Thereafter 1,918 $16,915 Total $ 1,316.1 Present value of net minimum lease payments
The GAP Inc. discloses the following schedule to its fiscal 2018 (ended February 2, 2019) 10-K report relating to its leasing to its leasing activities. Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. The aggregate minimum noncancelable annual lease payments under leases in effect on February 2, 2019, are as follows: Fiscal Year ($ millions) 2019 $1,098 2020 1,043 2021 847 2022 694 2023 512 Thereafter Total minimum lease commitments $5,638 1,444 Compute the present value of GAP's operating leases using the following assumptions Assmption Discount rate Round remaining lease term to the nearest whole year Year Present Value 1 $ 0 2 0 3 0 4 0 5 0 >5 0 $ 0 6%
Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% a. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability b. What amount will be added to the balance sheet as an asset? Amount added as an asset The rest of the questions are given in pictures below. please answer all parts correctly. i will upvote. thank you!!