Answer:
Explanation:
Base on the scenario been described in the question, the solve the problem through the following method
(a) It is a sales-type lease to the lessor, Hayes Corp. Hayes's (the manufacturer) profit upon sale is $50,000, which is recognized in the year of sale (2014). It is not an operating lease because title to the assets passes to the lessee, and the present value ($500,000) of the minimum lease payments equals or exceeds 90% ($450,000) of the fair value of the leased trailers. The remaining accounting treatment is similar to that accorded a direct-financing lease.
(b)($50,000 × 10) ÷ 4.62288 = $108,158.21 - 34
Accounting for Leases
Solution 21-128(cont.)
(c)Lease Amortization Schedule (Lessor) Lease Annual Interest on Receivable Lease Date Lease Rental Lease Receivable Recovery Receivable1 /1/15$500,00012/31/15$108,158$40,000$68,158431,84212/31/16108,15834,54773,611358,23112/31/17108,15828,65879,500278,731
(d) January 1, 2014Lease Receivable.........................................................................500,000Cost of Goods Sold......................................................................450,000Sales Revenue.................................................................500,000Inventory...........................................................................450,000December 31, 2015Cash.............................................................................................108,158Lease Receivable.............................................................68,158Interest Revenue..............................................................40,000December 31, 2016Cash.............................................................................................108,158Lease Receivable.............................................................73,611Interest Revenue..............................................................34,547*Ex. 21-129—Lessee and lessor accounting (sale-leaseback).
