Tolmeka Leasing purchased equipment for $3,000,000 and leased it to Munchow Industries on January 1, 2013. Both companies record appropriate adjusting entries quarterly. Required:
1. Following the guidance of the new ASU, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
2. Following the guidance of the new ASU, prepare the journal entries to record the lease by Tolmeka (lessor) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
3. Following current U.S. GAAP, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
4. Suppose the cost and fair value of the asset is $2,000,000 and its economic life is 5 years. Following current U.S. GAAP, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.

Question

Tolmeka Leasing purchased equipment for $3,000,000 and leased it to Munchow Industries on January 1, 2013. Both companies record appropriate adjusting entries quarterly.  Required:
1. Following the guidance of the new ASU, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
2. Following the guidance of the new ASU, prepare the journal entries to record the lease by Tolmeka (lessor) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
3. Following current U.S. GAAP, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
4. Suppose the cost and fair value of the asset is $2,000,000 and its economic life is 5 years. Following current U.S. GAAP, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.

Quizplus · Accepted Answer

The Answer of Tolmeka Leasing purchased equipment for $3,000,000 and leased it to Munchow Industries on January 1, 2013. Both companies record appropriate adjusting entries quarterly.  Required:
1. Following the guidance of the new ASU, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
2. Following the guidance of the new ASU, prepare the journal entries to record the lease by Tolmeka (lessor) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
3. Following current U.S. GAAP, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.
4. Suppose the cost and fair value of the asset is $2,000,000 and its economic life is 5 years. Following current U.S. GAAP, prepare the journal entries to record the lease by Munchow (lessee) at its commencement of the lease through the second lease payment on April 1, 2013. Round to nearest dollar. Show calculations.

Tolmeka Leasing Purchased Equipment for $3,000,000 and Leased It to Munchow