Logo
Home Study Material Contact Search
AI Chat FREE
  1. mathematics
  2. advance math
  3. brooklyn inc. offers boat tours down the hudson ri

Brooklyn Inc. offers boat tours down the Hudson River. The company has signed a lease for...

70.2K

Verified Solution

Question

Advance Math

Brooklyn Inc. offers boat tours down the Hudson River. Thecompany has signed a lease for a tour boat with an expectedlifespan of seven years, no estimated salvage value, and a fairmarket value of $225,000. The terms of the lease are asfollows:
·       The lease term begins onJanuary 1, 2018, and runs for 5 years.
·       The lease requires paymentsof $53,000 at the beginning of each year.
·       The lease payment includes$3,000 for maintenance and insurance costs.
·       At the end of the lease term,Brooklyn will be keep/own the tour boat.
·       The lessor’s implied interestrate is 6%, and Brooklyn uses straight-line depreciation forsimilar equipment. Brooklyn Inc. follows ASPE. Brooklyn’s year-endis December 31.
REQUIRED:
a.      Perform all three tests todetermine the nature of this lease, and indicate whether the leaseis to be considered a capital or operating lease.
b.     Prepare a lease amortization schedule.(1 Mark)
c.      Prepare all the journal entries onBrooklyn’s books that relate to the lease for the followingdates:
·       January 1, 2018
December 31, 2018

Answer & Explanation Solved by verified expert
4.2 Ratings (652 Votes)
Lessee AccountingBrooklyn Inc a This is a Finance Lease because 1The present value of the lease payment is more than the fair value of the asset 2Lease term is 5 year which covers major portion of asset life of 7 years 3At the end of lease term Brooklyn will keep the asset b The leasee should use a single accounting model for all type of lease Therefore the leasee shall record the lease liability right in use asset in the given case    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Find a unit vector that has the same direction as the given vector.-3i + 2j...

Calculus
Q

Louis Vuitton is about to introduce a new item to its line of women’s shoes. What...

Operations Management
Q

Journalize the following transactions in general journal form for the month of June 20XX. Identify each...

Accounting
Q

In undisturbed rock, lower layers are older and upper layers are younger. This principle, called...

Biology
Q

2 Let be the plane region bounded below by x y 1 and above by...

Basic Math
Q

Oscar, Renee, Penny and Hugo, all turkeys, are wandering through the beautiful forest. They spot...

Basic Math
Q

Which of the following would not be a representation of the differentiable function f where...

Basic Math
Q

Assume a company provided the following balance sheet: Total assets The acid-test (quick)...

Accounting
Q

jorgensen corporation uses standard costs with its job order cost accounting system. in january, an...

Accounting
Q

Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses...

Accounting
Q

Diamond Company manufactures two models of cassette recorders: VCH and MTV. Based on the following...

Accounting
Q

Pool Corporation, Inc., reported in its recent annual report that "In 2010, our industry experienced...

Accounting