Business, 20.09.2021 08:10 wolfking800
On January 1, 2020, Tamarisk Co. leased a building to Carla Vista Inc. The relevant information related to the lease is as follows.
1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $ 3,000,000 (unguaranteed).
2. The leased building has a cost of $ 3,500,000 and was purchased for cash on January 1, 2020.
3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value.
4. Lease payments are $ 270,000 per year and are made at the beginning of the year.
5. Carla Vista has an incremental borrowing rate of 6%, and the rate implicit in the lease is unknown to Carla Vista.
6. Both the lessor and the lessee are on a calendar-year basis.
A. Prepare the journal entries that Tamarisk should make in 2020.
B. Prepare the journal entries that Carla Vista should make in 2020.
C. If Carla Vista paid $ 30,000 to a real estate broker on January 1, 2020, as a fee for finding the lessor, what is the initial measurement of the right-of-use asset?
Answers: 1
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On January 1, 2020, Tamarisk Co. leased a building to Carla Vista Inc. The relevant information rela...
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