Name : Nabila Ika Sari

ID Number : 008201900007

Home Work Intermediate2

Instructions

(a)    What type of lease is this for the lessor? Discuss.

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

(c)    Prepare a lease amortization schedule for Hayes Corp. for the first three years.

(d)    Prepare the journal entries for the lessor for 2018 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
a. It is a sales-type lease to the lessor, Hayes Corp. Hayes’s (the manufacturer) profit
uponsale is €60,000, which is recognized in the year of sale (2018). It is not an
operating leasebecause title to the assets passes to the lessee, and the present value
(€600,000) of thelease payments equals or exceeds 90% (€540,000) of the fair value of the
leased trailers. The remaining accounting treatment is similar to that accorded a direct-
financinglease.
b. ($60,000 × 10) ÷  4.99271 = $120,175
c.
Lease Amortization Schedule (Lessor)
Date Annual Lease Interest On Lease Lease
Rental Lease Receivable Receivable
Receivable Reduction
1/1/18 600,000
1/1/18 120,175 0 120,175 479,825
1/1/19 120,175 38,386 81,789 398,036
1/1/20 120,175 31,843 88,332 309,704

d.
January 1, 2018
Lease Receivable 600,000
Cost of Good Sold 540,000
Sale Revenue 600,000
Inventory 540,000
Cash 120,175
Lease Receivable 120,175
 December 31, 2018
Lease Receivable 38,386
Interest Revenue 38,386