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.

Comprehend the role of raw materials in the production process and their accounting treatment.

Identify the computation and application of predetermined overhead rates in job-order costing.

Understand the recording and effect of direct and indirect labor costs.

Understand job-order costing systems and their use in manufacturing and service environments.

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Definitions:

Counterfeit Goods

Counterfeit goods are imitation products made with the intent to deceive by passing off as genuine articles, often violating trademark laws.

Federal Registration

The process of officially recording or enlisting something at a federal level, often for protection or regulation purposes.

Trademark

A symbol, word, or phrase legally registered or established by use as representing a company or product.

Trade Secret

Information that is not known to the public, confers a business advantage over competitors, and is subject to reasonable steps to keep it confidential.