Ch 15 Slides_Student

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Unformatted text preview: entries at RentPro inception of the lease. inception GENERAL JOURNAL Date Description Debit Jan 1 Lease receivable Inventory of equipment 25,873 Cash Lease receivable Credit 6,000 25,873 6,000 15-20 Slide 21 Lease Amortization Schedule Period 1/1/09 1/1/09 12/31/09 12/31/10 12/31/11 12/31/12 Lease Amortization Schedule Effective Decrease in Payments Interest Balance $ 6,000 6,000 6,000 6,000 6,000 $ $19,873 × 8% = $1,590 $19,873 × 8% = $1,590 1,590 1,237 856 444 $ 6,000 4,410 4,763 5,144 5,556 Outstanding Balance $ 25,873 19,873 15,463 10,700 5,556 0 $19,873 - $4,410 = $15,463 $19,873 - $4,410 = $15,463 $6,000 - $1,590 = $4,410 $6,000 - $1,590 = $4,410 15-21 Slide 22 Capital Leases – 2nd lease payment December 31, 2009, entry by Matrix. GENERAL JOURNAL Date Description Dec 31 Interest expense Lease obligation Cash Debit Credit 1,590 4,410 6,000 December 31, 2009, entry by RentPro. GENERAL JOURNAL Date Description Dec 31 Cash I nterest revenue Lease receivable Debit Credit 6,000 1,590 4,410 15-22 Slide 23 Depreciation by Lessee Depreciation expense is recorded in a manner Depreciation consistent with the firm’s usual policy concerning depreciation of other operational assets. depreciation If (1) title passes to the lessee at the end of the lease term, or (2) the lease contains a bargain purchase option (BPO), the asset is depreciated over the asset’s economic life. asset’s Otherwise, it is depreciated over the lease term. lease 15-23 Slide 24 Depreciation by Lessee At December 31, 2009, Matrix prepares the At following entry to recognize depreciation expense for the year. expense GENERAL JOURNAL Date Description Dec 31 Depreciation expense Accumulated depreciation Debit Credit 5,175 5,175 $25,873 = $5,175 5 years 15-24 Slide 25 Sales-Type Leases If the lessor is a manufacturer or dealer, the fair value of the leased asset generally is higher than the cost of the asset. is At inception of the lease, the lessor will record At inception of the lease, the lessor will reco...
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This note was uploaded on 02/09/2013 for the course ACCOUNTING 3000 taught by Professor Li during the Spring '13 term at CUNY Brooklyn.

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