Accounting Assignment | College Homework Help

Federated fabrications leased a tooling machine on January 1, 2021, for a three-year period ending December 31, 2023. The lease agreement specified annual payments of $37,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2022. College Homework HelpThe company had the option to purchase the machine on December 30, 2023, for $46,000 when its fair value was expected to be $61,000, a sufficient difference that exercise seems reasonably certain. The machine’s estimated useful life was six years with no salvage value. Federated was aware that the lessor’s implicit rate of return was 11%.

Don't use plagiarized sources. Get Your Assignment on
Accounting Assignment | College Homework Help
Just from $13/Page
Order Now

1) As indicated in class many times, list and briefly explain the 5 criteria to determine if this is a finance lease.

2) Is this a financing lease? How many of the criteria does this lease meet (that you can identify based on the information provided)?

3) Bonus (3 Points): Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease. Get Accounting Homework Help Today

Calculate your paper price

Pages(550 words)

Approximate price:-