Shinny Jewel C.

Vingno 08-18-2021
BSA-3

Problem 16-1

Fair Value at Sales Price 1,200,000

Cost of the Asset 2,500,000
Carrying Amount of the Asset 100,000
Remaining Useful life 5 years
Annual Rental payable at the beginning of the year 300,000

BOOKS OF GERMAN COMPANY

Cash 1,200,000
Accumulated Depreciation-Equipment 1,500,000
Equipment 2,500,000
Gain on right transferred 200,000

Rent Expense 300,000

Cash 300,000

BOOKS OF STERLING COMPANY

Equipment 1,200,000
Cash 1,200,000

Cash 300,000
Rent Income 300,000

Depreciation Expense 240,000

Accumulated Depreciaiton 240,000
(1,200,000/5)

Problem 16-2

Sales Price 500,000

Machinery 600,000
Accumulated Depreciation 120,000
Remaining life 10
Lease Term 3
Annual rental 100,000

BOOKS OF CANADA COMPANY

1/1/2019 Cash 500,000

Accumulated Depreciation-Machinery 120,000
Machinery 600,000
Gain on right transferred 20,000

12/31/2019 Rent Expense 100,000

Cash 100,000
Shinny Jewel C. Vingno 08-18-2021
BSA-3

BOOKS OF SAIGON COMPANY

1/1/2019 Machinery 500,000

Cash 500,000

12/31/2019 Cash 100,000

Rent Income 100,000

Depreciation Expense 50,000

Accumulated Depreciaiton 50,000
(500,000/10)

Problem 16-3
1. Initial Measurement of lease liability 2,274,600
(600,000*3.791)

2. Cost of ROU Asset 2,047,140

(2,274,600/5,000,000*4,500,000)

3. Sale price 5,000,000

Carrying Amount (4,500,000)
Total gain 500,000

Fair value 5,000,000

Right retained by seller-lessee (2,274,600)
Right transferred to the buyer-lessor 2,725,400

Gain on right to transfer to the buyer-lessor 272,540

(2,725,400/5,000,000*500,000)

4. BOOKS OF JUAN COMPANY

1/1/2019 Cash 5,000,000

Right of use asset 2,047,140
Machinery 4,500,000
Lease Liability 2,274,600
Gain on right to transfer to the buyer-lessor 272,540

12/21/2019 Interest Expense (2,274,600*10%) 227,460

Lease Liability 372,540
Cash 600,000

Depreciation Expense-ROUA 409,428

Accum. Dep. (2,047,140/5) 409,428
Shinny Jewel C. Vingno 08-18-2021
BSA-3

5. BOOKS OF BUYER-LESSOR

1/1/2019 Machinery 5,000,000

Cash 5,000,000

12/31/2019 Cash 600,000

Rent Income 600,000

Depreciation Expense 500,000

Accumulated Depreciaiton 500,000
(5,000,000/10)

Problem 16-4
1. Initial Measurement of lease liability (800,000*3.312) 2,649,600

2. Sale price 6,000,000

Fair value of machinery (5,000,000)
Excess of sale over fv of asset 1,000,000

Initial Measurement of lease liability (800,000*3.312) 2,649,600

additional financing equal excess of sale (1,000,000)
PV of lease liability related to rentals 1,649,600

Cost of ROU Asset 1,484,640

(1,649,600/5,000,000*4,500,000)

3. Fair Value 5,000,000

Carrying Amount (4,500,000)
Adjusted total gain 500,000

Fair value 5,000,000

Right retained by seller-lessee (1,649,600)
Right transferred to the buyer-lessor 3,350,400

Gain on right to transfer to the buyer-lessor 335,040

(3,350,400/5,000,000*500,000)

4. BOOKS OF PEDRO COMPANY

1/1/2019 Cash 6,000,000

Right of use asset 1,484,640
Machinery 4,500,000
Lease Liability 2,649,600
Gain on right to transfer to the buyer-lessor 335,040

12/31/2019 Interest Expense (2,649,600*8%) 211,968

Lease Liability 588,032
Cash 800,000
Shinny Jewel C. Vingno 08-18-2021
BSA-3

Depreciation Expense-ROUA (1,484,640/4) 371,160

Accum. Depreciatrion 371,160

5. BOOKS OF BUYER-LESSOR

1/1/2019 Machinery 5,000,000

Financial Asset 1,000,000
Cash 6,000,000

12/31/2019 Cash 498,068

Rent Income 498,068

Present Value Fraction Allocation

rental Income 1,649,600 1,649.6/2,649.6*800,000 498,068
financial asset 1,000,000 1,000/2,649.6*800,000 301,932
total present value 2,649,600 800,000

Cash 301,932
Financial Asset 221,932
Interest Income (1,000,000*8%) 80,000

Depreciation Expense 500,000

Accumulated Depreciaiton 500,000
(5,000,000/10)

Problem 16-5
1. Initial Measurement of Lease liability (500,000*2.67) 1,335,000

2. Sale price 4,000,000

Fair value of machine (5,000,000)
Excess of fair value over sale price (1,000,000)

PV of rentals (500,000*2.67) 1,335,000

Excess of fair value - prepayment of rental 1,000,000
total lease liability 2,335,000

Cost of ROU Asset 1,634,500

(2,335,000/5,000,000*3,500,000)

3. Fair Value 5,000,000

Carrying Amount (3,500,000)
Adjusted total gain 1,500,000

Fair value 5,000,000

Right retained by seller-lessee (2,335,000)
Right transferred to the buyer-lessor 2,665,000

Gain on right to transfer to the buyer-lessor 799,500

(2,665,000/5,000,000*1,500,000)
Shinny Jewel C. Vingno 08-18-2021
BSA-3

4. BOOKS OF HAZEL COMPANY

1/1/2019 Cash 4,000,000

Right of use asset 1,634,500
Machinery 3,500,000
Lease Liability 1,335,000
Gain on right to transfer to the buyer-lessor 799,500

12/31/2019 Interest Expense (1335000*6%) 80,100

Lease Liability 419,900
Cash 500,000

Depreciation Expense-ROUA (1,634,500/3) 544,833

Accum. Depreciation 544,833

5. BOOKS OF BUYER-LESSOR

1/1/2019 Machinery 4,000,000

Cash 4,000,000

12/31/2019 Cash 500,000

Rent Income 500,000

Depreciation Expense 400,000

Accumulated Depreciaiton 400,000
(4,000,000/10)

Problem 16-6
Sale price at fair value 2,400,000
Building 5,000,000 Carrying Amount (5,000,000-
1,600,000
Accumulated Depreciation 3,400,000 3,400,000)
Remaining useful life 15 years
lease tearm 8 years
Annual payment 300,000
PV of OA of 1 at 6% for 8 6.21
periods

1. Initial Measurement of lease liability 1,863,000

(300,000*6.21)

2. Cost of ROU Asset 1,242,000

(1,863,000/2,400,000*1,600,000)

3. Sale price 2,400,000

Carrying Amount (1,600,000)
Total gain 800,000
Shinny Jewel C. Vingno 08-18-2021
BSA-3

Fair value 2,400,000

Right retained by seller-lessee (1,863,000)
Right transferred to the buyer-lessor 537,000

Gain on right to transfer to the buyer-lessor 179,000

(537,000/2,400,000*800,000)

4. BOOKS OF CUBA COMPANY

1/1/2019 Cash 2,400,000

Right of use asset 1,242,000
Accumulated Depreciation 3,400,000
Building 5,000,000
Lease Liability 1,863,000
Gain on right to transfer to the buyer-lessor 179,000

12/31/2019 Interest Expense (1,863,000*6%) 111,780

Lease Liability 188,220
Cash 300,000

Depreciation Expense-ROUA 155,250

Accum. Dep. (1,242,000/8) 155,250

5. BOOKS OF MEXICO COMPANY

Building 2,400,000
Cash 2,400,000

Cash 300,000
Rent Income 300,000

Depreciation Expense (2,400,000/15) 160,000

Accumulated Depreciaiton 160,000

Problem 16-7
Sale price at fair value 5,000,000
Carrying Amount of Building 6,500,000
Remaining useful life 20 years
lease tearm 4 years
Annual payment 300,000
Implicit interest rate 6%
PV of OA of 1 at 6% for 4 3.465
periods

1. Initial Measurement of lease liability 1,039,500

(300,000*3.465)
Shinny Jewel C. Vingno 08-18-2021
BSA-3

2. Cost of ROU Asset 1,351,350

(1,,039,500/5000,000*6,500,000)

3. Sale price 5,000,000

Carrying Amount (6,500,000)
Total loss (1,500,000)

Fair value 5,000,000

Right retained by seller-lessee (1,039,500)
Right transferred to the buyer-lessor 3,960,500

Loss on right to transfer to the buyer-lessor (1,188,150)

(3960500/5000,000*1,500,000)

4. BOOKS OF WORLD COMPANY

1/1/2019 Cash 5,000,000

Right of use asset 1,351,350
Loss on right to transfer to the buyer-lessor 1,188,150
Machinery(Equipment) 6,500,000
Lease Liability 1,039,500

12/31/2019 Interest Expense (1,039,500*6%) 62,370

Lease Liability 237,630
Cash 300,000

Depreciation Expense-ROUA (1351350/4) 337,838

Accumulated Depreciation 337,838

5. BOOKS OF BUYER-LESSOR

1/1/2019 Machinery 5,000,000

Cash 5,000,000

12/31/2019 Cash 300,000

Rent Income 300,000

Depreciation Expense 250,000

Accumulated Depreciaiton 250,000
(5,000,000/20)

Problem 16-8

Date Payment Interest Princiopal Present Value

1/1/2019 1,200,000
12/31/2019 500,000 144,000 356,000 844,000
12/31/2020 500,000 101,280 398,720 445,280
12/31/2021 500,000 54,720 445,280 -
Shinny Jewel C. Vingno 08-18-2021
BSA-3

BOOKS OF GLOBE COMPANY

1/1/2019 Cash 1,200,000

Lease Liability 1,200,000

12/31/2019 Interest Expense 144,000

Lease Liability 356,000
Cash 500,000

BOOKS OF Buyer-Lessor

1/1/2019 Lease receivable 1,200,000

Cash 1,200,000

12/31/2019 Cash 500,000

Lease Receivable 356,000
Lease Income 144,000
Shinny Jewel C. Vingno 08-18-2021
BSA-3
Shinny Jewel C. Vingno 08-18-2021
BSA-3