01 Jul Teal Industries and Flint Inc Accounting for Leases Assignment
Teal Industries and Flint Inc. enter into an agreement that requires Flint Inc. to build three diesel-electric engines to Teal’s specifications. Upon completion of the engines, Teal has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is noncancelable, becomes effective on January 1, 2017, and requires annual rental payments of $384,165 each January 1, starting January 1, 2017.Teal’s incremental borrowing rate is 10%. The implicit interest rate used by Flint Inc. and known to Teal is 8%. The total cost of building the three engines is $2,395,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Teal depreciates similar equipment on a straight-line basis. At the end of the lease, Teal assumes title to the engines. Collectibility of the lease payments is reasonably certain; no uncertainties exist relative to unreimbursable lessor costs.show your solution in word document
show your solution in a word docoment.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.