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Exercise 2

This document contains multiple problems related to accounting for operating leases as a lessor. It provides journal entries for the lessor to record various lease transactions such as receiving rental payments, repairs expenses, depreciation of the leased asset, and amortization of initial direct costs. It also includes calculations of the gross and net investments in a finance lease, present value of lease payments, and journal entries to record a finance lease over its term from inception to maturity. The problems cover the full accounting process for an operating and finance lease from the perspective of the lessor.

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Drey Jan
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
36 views

Exercise 2

This document contains multiple problems related to accounting for operating leases as a lessor. It provides journal entries for the lessor to record various lease transactions such as receiving rental payments, repairs expenses, depreciation of the leased asset, and amortization of initial direct costs. It also includes calculations of the gross and net investments in a finance lease, present value of lease payments, and journal entries to record a finance lease over its term from inception to maturity. The problems cover the full accounting process for an operating and finance lease from the perspective of the lessor.

Uploaded by

Drey Jan
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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CHAPTER 12

Operating Lease - Lessor


PROBLEM 12-1

Requirement 1
Books of Lessor
1 Equipment ₱ 3,000,000.00
Cash ₱ 3,000,000.00

2 Cash (40,000*9) ₱ 360,000.00


Rent Income ₱ 360,000.00

3 Cash ₱ 120,000.00
Unearned Rent Income ₱ 120,000.00

4 Repairs ₱ 20,000.00
Cash ₱ 20,000.00

5 Unearned Rent Income ₱ 30,000.00


Rent Income (120,000/3*9/12) ₱ 30,000.00

6 Depreciation ₱ 300,000.00
Accummulated Depreciation (3,000,000/10) ₱ 300,000.00

Requirement 2
Rent Income ₱ 390,000.00
Less: Repairs ₱ 20,000.00
Depreciation ₱ 300,000.00 ₱ 320,000.00
Net Income of Lessor ₱ 70,000.00
CHAPTER 12
Operating Lease - Lessor
PROBLEM 12-3

Requirement 1
Books of Lessor
1 Machinery ₱ 2,400,000.00
Cash ₱ 2,400,000.00

2 Cash (36,000*9) ₱ 324,000.00


Rent Income ₱ 324,000.00

3 Deferred Initial Direct Costs ₱ 120,000.00


Cash ₱ 120,000.00

4 Amortization of Initial Direct Costs ₱ 22,500.00


Deferred Initial Direct Costs (120,000/4*9/12) ₱ 22,500.00

5 Depreciation ₱ 180,000.00
Accumulated Depreciation (2,400,000/10*9/12) ₱ 180,000.00

Requirement 2
Machinery ₱ 2,400,000.00
Accumulated Depreciation -₱ 180,000.00
Carrying Amount ₱ 2,220,000.00
Deferred Initial Direct Costs ₱ 97,500.00
Adjusted Carrying Amount ₱ 2,317,500.00
CHAPTER 12
Operating Lease - Lessor
PROBLEM 12-6

2020
1 Equipment ₱ 375,000.00
Cash ₱ 375,000.00

2 Equipment ₱ 75,000.00
Cash ₱ 75,000.00

2021
1 Cash ₱ 180,000.00
Rent Income ₱ 180,000.00

2 Repairs ₱ 7,000.00
Transportation ₱ 3,000.00
Cash ₱ 10,000.00

3 Depreciation ₱ 90,000.00
Acccumulated Depreciation (450,000/5) ₱ 90,000.00

4 Rent Income ₱ 45,000.00


Unearned Rent Income (15,000*3) ₱ 45,000.00
CHAPTER 12
Operating Lease - Lessor
PROBLEM 12-7

2020 Rent Receivable ₱ 765,000.00


Rent Income ₱ 765,000.00

Total Rent (100000*51) ₱ 5,100,000.00


Average Annual Rent (5,100,000/5) ₱ 1,020,000.00
Rent from April 1 to December 31,2020 (1,020,000*9/12) ₱ 765,000.00

2021 Cash (100,000*12) ₱ 1,200,000.00


Rent Income ₱ 1,020,000.00
Rent Receivable ₱ 180,000.00

2022 Cash ₱ 1,200,000.00


Rent Income ₱ 1,020,000.00
Rent Receivable ₱ 180,000.00

2023 Cash ₱ 1,200,000.00


Rent Income ₱ 1,020,000.00
Rent Receivable ₱ 180,000.00

2024 Cash ₱ 1,200,000.00


Rent Income ₱ 1,020,000.00
Rent Receivable ₱ 180,000.00

2025 Cash (100000*3) ₱ 300,000.00


Rent Income (1,020,000*3/12) ₱ 255,000.00
Rent Receivable ₱ 45,000.00
CHAPTER 12
Operating Lease - Lessor
PROBLEM 13-2

Requirement 1
Gross Rentals (900,000*8) ₱ 7,200,000.00
Residual Value ₱ 600,000.00
Gross Investment - Debit to lease receivable ₱ 7,800,000.00
Net Investment - Cost Equipment ₱ 5,250,000.00
Total Financial Revenue ₱ 2,550,000.00

Requirement 2
Date Payment Interest Principal Present Value
01/01/2020 ₱ 5,250,000.00
01/01/2020 ₱ 900,000.00 - ₱ 900,000.00 ₱ 4,350,000.00
01/01/2021 ₱ 900,000.00 ₱ 522,000.00 ₱ 378,000.00 ₱ 3,972,000.00
01/01/2022 ₱ 900,000.00 ₱ 476,640.00 ₱ 423,360.00 ₱ 3,548,640.00
01/01/2023 ₱ 900,000.00 ₱ 425,837 ₱ 474,163 ₱ 3,074,477
01/01/2024 ₱ 900,000.00 ₱ 368,937 ₱ 531,063 ₱ 2,543,414
01/01/2025 ₱ 900,000.00 ₱ 305,210 ₱ 594,790 ₱ 1,948,624
01/01/2026 ₱ 900,000.00 ₱ 233,835 ₱ 666,165 ₱ 1,282,459
01/01/2027 ₱ 900,000.00 ₱ 153,895 ₱ 746,105 ₱ 536,354
01/01/2028 ₱ 600,000.00 ₱ 63,646 ₱ 536,354 -
₱ 7,800,000.00 ₱ 2,550,000

Requirement 3
2020
Jan-01 Lease Receivable ₱ 7,800,000.00
Equipment ₱ 5,250,000.00
Unearned Interest Income ₱ 2,550,000.00

Jan-01 Cash ₱ 900,000.00


Lease Receivable ₱ 900,000.00

Dec-31 Unearned Interest Income ₱ 522,000.00


Interest Income ₱ 522,000.00

2021
Jan-01 Cash ₱ 900,000.00
Lease Receivable ₱ 900,000.00

Dec-31 Unearned Interest Income ₱ 476,640.00


Interest Income ₱ 476,640.00

Requirement 4
2027
Jan-01 Cash ₱ 900,000.00
Lease Receivable ₱ 900,000.00

Dec-31 Unearned Interest Income ₱ 63,646.00


Interest Income ₱ 63,646.00

Requirement 5
2028
Jan-01 Equipment ₱ 500,000.00
Loss of Finance Lease ₱ 100,000.00
Lease Receivable ₱ 600,000.00
CHAPTER 12
Operating Lease - Lessor
PROBLEM 13-5

Question 1,2,3
Gross Rentals 900000*8 ₱ 7,200,000.00 #1
Residual Value ₱ 600,000.00
Gross Investment - Debit to lease receivable ₱ 7,800,000.00
Net Investment - Cost Equipment 5000000+250000 ₱ 5,250,000.00 #2
Total Financial Revenue ₱ 2,550,000.00 #3

Question 4
Date Payment Interest Principal Present Value
01/01/2020 ₱ 5,250,000.00
01/01/2020 900,000 - ₱ 900,000.00 ₱ 4,350,000.00
01/01/2021 900,000 ₱ 522,000.00 ₱ 378,000.00 ₱ 3,972,000.00
#4

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