On January 1, 2016, Parent Company acquired 100% of the common stock of Subsidiary Company for $365,000.On this date, Subsidiary had common stock, other paid in capital, and retained earnings of $50,000, $100,000, and $200,000 respectively.Any excess of cost over book value is due to goodwill.Parent uses the simple equity method to account for its investment in subsidiary.
?
On January 1, 2017, Parent purchased equipment for $174,120 and immediately leased the equipment to Subsidiary on a 4-year lease.The transaction was legally structured as a sales-type lease with a present value for the minimum lease payments of $204,120.Parent recorded the following entry:
?
?

\begin{array}{lr}\text { Minimum Lease Payments Receivable } & 240,000 \\\text { Uneamed Interest Income } && 35,880 \\\text { Equipment } && 174,120 \\\text { Sales Profit on Lease } && 30,000\end{array}

The minimum lease payments of $60,000 are to be made annually on January 1, beginning immediately, for a total of 4 payments.The implicit interest rate is 12%.The lease provides for an automatic transfer of title at the end of 4 years.The estimated useful life of the equipment is 6 years.The lease has been capitalized by both companies.
?
A lease amortization schedule, applicable to either company, is presented below:
?
?
$On January 1, 2016, Parent Company acquired 100% of the common stock of Subsidiary Company for $365,000.On this date, Subsidiary had common stock, other paid in capital, and retained earnings of $50,000, $100,000, and $200,000 respectively.Any excess of cost over book value is due to goodwill.Parent uses the simple equity method to account for its investment in subsidiary. ? On January 1, 2017, Parent purchased equipment for $174,120 and immediately leased the equipment to Subsidiary on a 4-year lease.The transaction was legally structured as a sales-type lease with a present value for the minimum lease payments of $204,120.Parent recorded the following entry: ? ? \begin{array}{lr} \text { Minimum Lease Payments Receivable } & 240,000 \\ \text { Uneamed Interest Income } && 35,880 \\ \text { Equipment } && 174,120 \\ \text { Sales Profit on Lease } && 30,000 \end{array} The minimum lease payments of $60,000 are to be made annually on January 1, beginning immediately, for a total of 4 payments.The implicit interest rate is 12%.The lease provides for an automatic transfer of title at the end of 4 years.The estimated useful life of the equipment is 6 years.The lease has been capitalized by both companies. ? A lease amortization schedule, applicable to either company, is presented below: ? ? Required: ? Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-13 partial worksheet as of December 31, 2017.Key and explain all eliminations and adjustments. ? ?$ Required:
?
Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-13 partial worksheet as of December 31, 2017.Key and explain all eliminations and adjustments.
?
?
$On January 1, 2016, Parent Company acquired 100% of the common stock of Subsidiary Company for $365,000.On this date, Subsidiary had common stock, other paid in capital, and retained earnings of $50,000, $100,000, and $200,000 respectively.Any excess of cost over book value is due to goodwill.Parent uses the simple equity method to account for its investment in subsidiary. ? On January 1, 2017, Parent purchased equipment for $174,120 and immediately leased the equipment to Subsidiary on a 4-year lease.The transaction was legally structured as a sales-type lease with a present value for the minimum lease payments of $204,120.Parent recorded the following entry: ? ? \begin{array}{lr} \text { Minimum Lease Payments Receivable } & 240,000 \\ \text { Uneamed Interest Income } && 35,880 \\ \text { Equipment } && 174,120 \\ \text { Sales Profit on Lease } && 30,000 \end{array} The minimum lease payments of $60,000 are to be made annually on January 1, beginning immediately, for a total of 4 payments.The implicit interest rate is 12%.The lease provides for an automatic transfer of title at the end of 4 years.The estimated useful life of the equipment is 6 years.The lease has been capitalized by both companies. ? A lease amortization schedule, applicable to either company, is presented below: ? ? Required: ? Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-13 partial worksheet as of December 31, 2017.Key and explain all eliminations and adjustments. ? ?$ $On January 1, 2016, Parent Company acquired 100% of the common stock of Subsidiary Company for $365,000.On this date, Subsidiary had common stock, other paid in capital, and retained earnings of $50,000, $100,000, and $200,000 respectively.Any excess of cost over book value is due to goodwill.Parent uses the simple equity method to account for its investment in subsidiary. ? On January 1, 2017, Parent purchased equipment for $174,120 and immediately leased the equipment to Subsidiary on a 4-year lease.The transaction was legally structured as a sales-type lease with a present value for the minimum lease payments of $204,120.Parent recorded the following entry: ? ? \begin{array}{lr} \text { Minimum Lease Payments Receivable } & 240,000 \\ \text { Uneamed Interest Income } && 35,880 \\ \text { Equipment } && 174,120 \\ \text { Sales Profit on Lease } && 30,000 \end{array} The minimum lease payments of $60,000 are to be made annually on January 1, beginning immediately, for a total of 4 payments.The implicit interest rate is 12%.The lease provides for an automatic transfer of title at the end of 4 years.The estimated useful life of the equipment is 6 years.The lease has been capitalized by both companies. ? A lease amortization schedule, applicable to either company, is presented below: ? ? Required: ? Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-13 partial worksheet as of December 31, 2017.Key and explain all eliminations and adjustments. ? ?$

Lease Terms Can Be Considered to Be "Significantly Affected":​

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Lease Terms Can Be Considered to Be "Significantly Affected":

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge