1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Sphinxa [80]
3 years ago
7

Carla VistaInc. leased a new crane to Martinez Construction under a 5-year, non-cancelable contract starting January 1, 2020. Te

rms of the lease require payments of $45,500 each January 1, starting January 1, 2020. The crane has an estimated life of 7 years, a fair value of $220,000, and a cost to Carla Vista of $220,000. The estimated fair value of the crane is expected to be $45,000 (unguaranteed) at the end of the lease term. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. Both Carla Vista and Martinez adjust and close books annually at December 31. Collectibility of the lease payments is probable. Martinez’s incremental borrowing rate is 8%, and Carla Vista’s implicit interest rate of 8% is known to Martinez.
Required:
a. Identify the type of lease involved and give reasons for your classification. Discuss the accounting treatment that should be applied by both the lessee and the lessor.
b. Prepare all the entries related to the lease contract and leased asset for the year 2020 for the lessee and lessor, assuming the following amounts:

1. Insurance $500.
2. Taxes $2,000.
3. Maintenance $650.
4. Straight-line depreciation and salvage value $15,000.

c. Discuss what should be presented in the balance sheet, the income statement, and the related notes of both the lessee and the lessor at December 31, 2020.
Business
1 answer:
Marrrta [24]3 years ago
4 0

Answer:

Lessee's Entries:

Rent expense (Dr.) $45,500

Cash (Cr.) $45,500

Lessor's Entries:

1. Property Tax expense (Dr.) $2,000

Maintenance and Repair Expense (Dr.) $650

Insurance Expense (Dr.) $500

Accounts Payable (Cr.) $3,150

2. Depreciation Expense (Dr.) $ 29,285

Accumulated  Depreciation (Cr.) $29,285

3.Cash (Dr.) $45,500

Rent Revenue (Cr.) $45,500

Explanation:

The lease is considered as an operating lease as it does not have bargain purchase option and renewal options. The property ownership is not transferred in this lease.

Depreciation expense:

[ Cost - Salvage Value ] / 7

220,000 - 15000 / 7

You might be interested in
For anything to be considered money it must be Group of answer choices either a commodity or a token, as long as it is generally
Sindrei [870]

Answer:

Either a commodity or a token, as long as it is generally accepted as a means of payment.

4 0
3 years ago
Is 6 a prime number and why​
miskamm [114]

no 6 is not a prime number because It has more than two multiples

7 0
3 years ago
Read 2 more answers
Item 2 item 2 companies such as maybelline often use _____ advertising to convince consumers to take action such as switching br
PtichkaEL [24]
<span>There are two possible types of advertising that apply. Companies such as maybelline often use push/persuasive advertising to convince consumers to take action such as switching brands, trying a new product, or even continuing to buy the advertised product. 


1) Persuasive advertising is when company promotes its products in every possible way such as representing the promotional item by flyers, magazines, television, radio and billboards. Such type of advertising is considered to be traditional and its viral influence usually leads company to success in sales.
<span>
2) What about push advertising, this type is meant to make company be competitive in sphere of marketing. It is usually characterised by persuading promotion that is aimed to make a consumer buy a particular product, ensuring that this one is the best among its analogues.</span></span>
3 0
3 years ago
Jason is an employee at Manisch Burger and Meals. He is assigned the task of serving soft drinks to customers who order meals co
VARVARA [1.3K]

Answer:

C) Job specialization

Explanation:

Job specialization defines that who is specialist for a particular field or subject. It shows expertise in a specific sector like finance, operation, Sales manager, customer service, delivery boy, human resource. etc. It indicates talent, skills, competencies of a particular person.

Therefore in the given scenario Jason who is serving the potato fries, a burger, and a roll shows the expertise in his field and that is called Job specialization.

6 0
3 years ago
Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $81,400.
ivann1987 [24]

Answer:

$7,326

Explanation:

Double Decline Balance = 2 x SLDP x SLDBV

where,

SLDP = Straight Line Depreciation Percentage

          = 100 ÷ useful life

          = 100 ÷ 20

          = 5 %

and

SLDBV = Straight Line Percentage Book Value

Year 1

Double Decline Balance = 2 x 5% x $81,400

                                           = $8,140

Year 2

Double Decline Balance = 2 x 5% x ($81,400 - $8,140)

                                           = $7,326

Therefore

The machine's second-year depreciation using the double-declining balance method is $7,326.

4 0
3 years ago
Other questions:
  • A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for
    10·1 answer
  • Ian admits to and corrects bookkeeping mistakes right away. Shin Lee reported a conflict-of-interest issue to her supervisor imm
    9·1 answer
  • Jana completed an informational interview with a preschool teacher in her area. She wants to write a thank-you letter. What shou
    15·1 answer
  • The systematic study and application of knowledge about how individuals and groups act within the organizations where they work
    13·1 answer
  • 1.Will expansionary monetary policy cause crowding out of investment in a large country in a global economy with flexible exchan
    8·1 answer
  • How does clothing satisfies human want​
    5·1 answer
  • coolidge Company owes $1,000 for merchandise inventory purchased from Ross Company during April. The amount owed is now past-due
    6·1 answer
  • joe dimaggio, the legendary baseball player, was a longtime ad spokesperson for which brand? alka-seltzer
    15·1 answer
  • A) Which talent management approach better fits the SMEs context and
    15·1 answer
  • What is corporate social performance and how does this differ from traditional corporate performace?
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!