Three different lease transactions are presented below for Manitoba Enterprises. Assume that all lease transactions...
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Accounting
Three different lease transactions are presented below for Manitoba Enterprises. Assume that all lease transactions start on January Manitoba does not receive title to the properties, either during the lease term or at the end of it The yearly rental for each of the leases is paid at the beginning of each year. Manitoba Enterprises prepares its financial statements using ASPE.
ManufacturingEquipment
Vehicles
OfficeEquipment
Lease term
years
years
years
Estimated economic life
years
years
years
Yearly rental payment
$
$
$
Fair market value of leased asset
$
$
$
Present value of lease rental payments
$
$
$
Interest rate
Instructions
Which of the above leases are operating leases and which are capital leases? Explain.
How should the lease transaction for each of the above assets be recorded on January
Record the depreciation for each of the leases and accrue any interest on December The company uses straightline depreciation.
Describe how the lease transaction would be reported on the income statement and balance sheet for each of the above assets.
Answer & Explanation
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