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
