Leasing Under Us Gaap

Oct 6th 2011 Leasing Stpacegies Briggs, Rex Chainbelt, Harnischfeger Inc. Evaluation for different situations/strategies for three companies ------------------------------------------------- Back terra firma tuition: On December 31st 2000, Briggs barter fors defeat and a structure for $120,000, with $92,000 as value of the structure, and $28,000 as value of the bring. On the next day, Briggs affianced the twist and the land to Rex Chainbelt. With professional appraisement, Rex determines that the building and land has decent value of $90,000 and $30,000. On 12/31/2000, the ledger entry for Briggs is the following: Land| | | $28,000| | Building| | | $92,000| | | funds| | | $120,000| The land and building are recorded as the purchase price. ------------------------------------------------- timber I Lessee: On 1/1/2001, Rex is leasing the land and building from Briggs. We need to determine what is the pursue type. For Rex we tested the postulate for quartet criteria of Group I test. 1. If the lease transfer ownership of the post to the lessee? Briggs does not transfer any ownership of the property to Rex-No. 2. If the lease contains a bargain-purchase option? There is no bargain-purchase option in this lease- No.

3. If the lease term is equal to 75% of the borderline lease or more of the estimated biography of the leased property? The least term is 6 twelvemonths. It is less than 7.5 years, which is 75% of the 10 year estimated life of building. Under FASB Accounting Standard Codification, we do not depr eciate land for the fact that land shall not! be depreciated or amortized, since they have, by definition, an indefinite useful life (FASB, ) 4. If the give in value of the minimum lease payments (excluding executory costs) equals or exceeds 90% of the fair value of the leased property? As the lessee, Rex has the incremental borrowing rate of 10%, and Rex does not chicane the implicit rate for Brigg is 8%. Under the...If you want to outwit a climb essay, order it on our website: OrderCustomPaper.com

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