Leewin Brokerage Leewin Brokerage Enters into a Lease Agreement with Bumble Motors

question 103

Essay

Leewin Brokerage
Leewin Brokerage enters into a lease agreement with Bumble Motors to lease an automobile with a fair value of $75,000 under a 5-year lease on December 20, 2018. The lease commences on January 1, 2019, and Leewin will return the automobile to Bumble on December 31, 2023. The automobile has an estimated useful life of 7 years. Leewin made a lease payment of $10,000 on December 20, 2018. In addition, the lease agreement stipulates annual payments of $10,000, due on January 1 of 2019, 2020, 2021, 2022, and 2023. The implicit rate of the lease is 7% and is known by Leewin. There is no purchase option, no lease incentives, no residual value guarantees, and no transfer of ownership. Leewin incurs initial direct costs of $2,000.
-Based on the above information, calculate the right-of-use asset on January 1, 2019.

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Definitions:

Seminiferous Tubules

Seminiferous tubules are tightly coiled structures within the testes where spermatogenesis, the production of sperm, occurs.

Testes

Male gonads that produce sperm and the male sex hormones.

Scrotum

Saclike structure of a male that houses the testes.

Sperm Duct

Also known as the vas deferens, it is a tube that carries sperm from the epididymis to the ejaculatory ducts in anticipation of ejaculation.