If any group 1 conditions are met plus all group 2

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Unformatted text preview: If any group 1 conditions are met, plus all group 2 conditions are met, then the lease is a direct financing or a sales type lease. A sales-type lease involves a manufacturer’s or dealer’s profit, and a direct-financing lease does not. Chapter 15-29 Classification of Leases by the Lessor Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor A lessor may classify a lease as an operating lease but the lessee may classify the same lease as a capital lease. Chapter 15-30 In substance the financing of an asset purchase by the lessee. Direct-Financing Method (Lessor) Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Chapter 15-31 Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Prepare an amortization schedule that would be suitable for the lessor. 10% Recovery Lease I nterest of Lease Date Payment Revenue Receivable Receivable 1/ 1/ 07 245, 000 $ 1/ 1/ 07 46, 000 $ 46, 000 $ 199, 000 12/ 31/ 07 46, 000 19, 900 26, 100 172, 900 12/ 31/ 08 46, 000 17, 290 28, 710 144, 190 12/ 31/ 09 46, 000 14, 419 31, 581 112, 609 12/ 31/ 10 46, 000 11, 261 34, 739 77, 870 12/ 31/ 11 46, 000 7, 787 38, 213 39, 657 12/ 31/ 12 43, 622 3, 965 39, 657 0 * * rounding * * Chapter 15-32 Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Prepare all of the journal entries for the lessor for 2007 and 2008. Chapter 15-33 Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Prepare all of the journal entries for the lessor for 2007 and 2008. Chapter 15-34 Records each rental receipt as rental revenue. Depreciates the leased asset in the normal manner. Any prepaid or noneconomic payment patters are straight-lined. Operating Method (Lessor) Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Accounting by the Lessor Chapter 15-35 1. Residual values. 2. Sales-type leases (lessor). 3. Bargain purchase options. 4. Initial direct costs. 5. Sale-Leaseback 6. Current versus noncurrent classification. 7. Disclosure. Special Accounting Problems Special Accounting Problems Special Accounting Problems Special Accounting Problems Chapter 15-36 Lessee Accounting for Residual Value The accounting consequence is that the minimum lease payments include the guaranteed residual value but excludes the unguaranteed residual value. Residual Values Special Accounting Problems Special Accounting Problems Special Accounting Problems Special Accounting Problems Chapter 15-37 Illustration (LESSEE and LESSOR Computations and Entries) On Jan. 1, 2007, Velde Company (lessee) entered into a four-year, noncancellable contact to lease a computer for Exceptional Computer Company (lessor). Annual rentals of $16,228 are to be paid each Jan. 1. The cost of the computer to Exceptional Computer Company was $60,000 and has an estimated useful life of four years and a $5,000 residual value. was $60,000 and has an estimated useful life of four years and a $5,000 residual value....
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If any group 1 conditions are met plus all group 2...

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