Tutorial 10 [answer].xlsx

Buy machine feb 21, 2015 Estimated useful life Residual Value Depreciation method

1,200,000 10 year 0 SLM

March 1; lease the machine Estimated useful life monthly rental purchase option

4 year 15,600 No

Benefit and Risk of Ownership Test estimated useful life vs lease contract duration test Uniqness of the assets Transfer risk and reward Option to buy at low price PV minimum rental payment substansial to FV asset

no n.a no no n.a

Since there isn't capitalization criteria fulfill it is an operating lease What expense should Sage record? Sage is the lessee. The expense that should be report is equal to monthly rental payment.

Journal: For the year ended dec 31, 2015

Lessor

Lesse

Cash 156,000 Rent expense Rent Revenue 156,000 Cash Journal to record payment and receipt of lease agreement Depreciation exp 100,000 Acc. Depr-machine 100,000 Journal to record depreciation of asset What income or loss before tax Hooke record at 31 Dec 2015 Rental revenue less: Depreciation exp Income before tax

156,000 100,000 Beban depresiasi utk 10 bulan 56,000

Lesse

eipt of lease agreement

of asset

156,000 156,000