Talkaholics Inc. leased a sa

timer Asked: Dec 16th, 2015

Question description

Talkaholics Inc. leased a satellite transmission device from ACME Satellites on January 1, 2016. ACME paid $1,000,000 for the satellite which retails for $1,307,362. The lease contained the following information: Lease term  3 years (6 semiannual periods) Semiannual rental payments  $246,000 made at the beginning of each period Economic life of the asset  4 years Implicit interest rate (known to Lessee)  12% Lessee’s incremental rate  10% Unguaranteed residual value  $80,000 Regulatory fees paid by lessor  $6,000/twice each year (included in rental payments) Lessor’s initial direct costs  $9,000 Contingent rental payments  Additional $8,000 if revenues exceed a specified base REQUIRED: What type of lease is this for Talkaholics? Explain.-What type of lease is this for ACME? Explain.Prepare the appropriate entries for both Talkaholics and ACME for 2016. Prepare the appropriate entries for both Talkaholics and ACME on December 31, 2019 (the end of the lease term), assuming the device is returned to the lessor and its actual residual value is

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