Neely BBQ leased equipment from Smoke Industries on January 1, 2013. Smoke Industries had manufactured the equipment at a cost of $810,000. Its cash selling price and fair value is $1,287,756. Both companies employ the lease ASU. Required:
1. Prepare the appropriate entries for Neely BBQ (Lessee) on January 1, 2013, and December 31, 2013.
2. Prepare the appropriate entries for Smoke Industries (Lessor) on January 1, 2013, and December 31, 2013. Assume that Smoke Industries determined that it does retain exposure to significant risks or benefits associated with the equipment.
3. Prepare the appropriate entries for Smoke Industries (Lessor) on January 1, 2013, and December 31, 2013. Assume that Smoke Industries determined that it does not retain exposure to significant risks or benefits associated with the equipment.

Question

Neely BBQ leased equipment from Smoke Industries on January 1, 2013. Smoke Industries had manufactured the equipment at a cost of $810,000. Its cash selling price and fair value is $1,287,756. Both companies employ the lease ASU.  Required:
1. Prepare the appropriate entries for Neely BBQ (Lessee) on January 1, 2013, and December 31, 2013.
2. Prepare the appropriate entries for Smoke Industries (Lessor) on January 1, 2013, and December 31, 2013. Assume that Smoke Industries determined that it does retain exposure to significant risks or benefits associated with the equipment.
3. Prepare the appropriate entries for Smoke Industries (Lessor) on January 1, 2013, and December 31, 2013. Assume that Smoke Industries determined that it does not retain exposure to significant risks or benefits associated with the equipment.

Quizplus · Accepted Answer

The Answer of Neely BBQ leased equipment from Smoke Industries on January 1, 2013. Smoke Industries had manufactured the equipment at a cost of $810,000. Its cash selling price and fair value is $1,287,756. Both companies employ the lease ASU.  Required:
1. Prepare the appropriate entries for Neely BBQ (Lessee) on January 1, 2013, and December 31, 2013.
2. Prepare the appropriate entries for Smoke Industries (Lessor) on January 1, 2013, and December 31, 2013. Assume that Smoke Industries determined that it does retain exposure to significant risks or benefits associated with the equipment.
3. Prepare the appropriate entries for Smoke Industries (Lessor) on January 1, 2013, and December 31, 2013. Assume that Smoke Industries determined that it does not retain exposure to significant risks or benefits associated with the equipment.

Neely BBQ Leased Equipment from Smoke Industries on January 1