Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. please help !!! on january 1, 2023, highland lease

Please help !!! On January 1, 2023, Highland leased equipment to Larkin Company under a...

80.2K

Verified Solution

Question

Accounting

Please help !!!

On January 1, 2023, Highland leased equipment to Larkin Company under a six-year noncancelable lease agreement. The following information about the lease and the equipment is provided:

1. Equal annual payments that are due on January 1 each year provide Highland with an 8% return on net investment.

2. Title to the equipment passes to Larkin at the end of the lease.

3. The fair value of the equipment is $600,0000. The cost of the equipment to Highland is $540,000. The equipment has an expected useful life of nine years.

4. Collectibility of the lease payments is probable.

(a) Using the lease tests outlined, determine what type of lease this is for the lessor.

(b) Calculate the annual lease payment. (Round to nearest dollar.)

(c) Prepare a lease amortization schedule for Highland Corporation for the first three years.

(d) Prepare the journal entries for the lessor for 2023 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue (assume the use of a perpetual inventory method and round all amounts to the nearest dollar)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students