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 culture: On December 31st 2000, Briggs barter fors primer coat and a structure for $120,000, with $92,000 as value of the structure, and $28,000 as value of the bolt down. On the next day, Briggs affianced the edifice 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. ------------------------------------------------- smell 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 operate for quatern criteria of Group I test. 1. If the lease transfer ownership of the home to the lessee? Briggs does non transfer any ownership of the plaza 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 negligible lease or more of the estimated purport 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 depreciate land for the fact that land shall not be de! preciated 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 complete the implicit rate for Brigg is 8%. Under the...If you want to experience a climb essay, order it on our website: OrderCustomPaper.com

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