. Entity A leases computer equipment to customers under direct-financing leases. The equipment has no residual value at the end of the lease and the leases do not contain bargain purchase options. Entity A wishes to earn 8% interest on a five-year lease of equipment with a fair value of P323,400. The first rental payment is due at the lease commencement. What is the total amount of interest revenue that Entity A will eam over the life of the lease? a. 51,600 b. 75,000 d. 139,450 AICRA)

. Entity A leases computer equipment to customers under direct-financing leases. The equipment has no residual value at the end of the lease and the leases do not contain bargain purchase options. Entity A wishes to earn 8% interest on a five-year lease of equipment with a fair value of P323,400. The first rental payment is due at the lease commencement. What is the total amount of interest revenue that Entity A will eam over the life of the lease? a. 51,600 b. 75,000 d. 139,450 AICRA)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Aa.31.
Identify the differences between a Finance Lease and an Operating Lease 5.2. hijk Ltd leases an asset as a lessee. The lease agreement is for 6 years. Lease instalments of R145 545 made at the beginning of the period and interest rate is 9%. The commencement of the lease is 1 April 2021. Asset is depreciated over 4 years. The tax rate is 28%. Lease payments are allowed as a deduction when paid. Profit before tax is R600 000 Journalise the transactions for the year ended 31 December 2021 (Journal narrations are required)
On January 1, 2020, Mountain Inc. leases a machine used in its operations. The annual lease payment is $10,000 due on December 31 of 2020, 2021, and 2022. The fair value of the machine on January 1, 2020 is $26,730. The machine has no residual value. Mountain could borrow on a three-year collateralized loan at 6%. If the lease is accounted for as a finance lease, the total expenses related to this lease contract that Mountain Inc. will report in its income statement for the year ending December 31, 2020 is Select one: a. $10,600 b. $10,514 c. $10,717 d. $10,000
A lessor signs a lease agreement with a lessee. The lease term is only 50% of the economic life of the asset, there is no bargain purchase, ownership does not transfer, and the asset is not specialized. The present value of lease payments is 92% of the asset’s fair value. This is a(an) _________ lease to the lessee and lessor, respectively (enter the number that represents the correct answer). To the lessee To the lessor operating lease operating lease operating lease sales-type lease finance lease operating lease finance lease sales-type lease
11. Glade Company leases computer equipment to customers under direct financing lease. The equipment has no residual value at the end of the lease and the leases do not contain purchase option. Glade wishes to earn 8% interest on a five- year lease of equipment with a fair value of P323,400. The present value of an annuity due of P1 at 8% for 5 years is 4.312. What is the total amount of interest revenue that Glade will earn over the life of the lease? * a. P51,600 b. P75,000 c. P129,360 O d. P139,450
Company A leases a motor vehicle from Company B.• The lease became effective 1 January 2014 and the lease term is for 4 years.• The annual lease payments are 10 000 per annum, in arrears.• There is no option of renewal (of the lease agreement).• The implicit interest rate is 10%.• The fair value of the motor vehicle at 1 January 2014 is 31,700. Required:For each of the scenarios below, discuss whether or not the above lease agreementconstitutes a finance lease: Scenario 1: The useful life of the motor vehicle is 8 years. At the end of the lease period,ownership of the motor vehicle transfers from Company B to Company A.  Scenario 2: The useful life of the motor vehicle is 4 years. At the end of the lease period,ownership of the motor vehicle remains with Company B.  Scenario 3: If the lease payments per annum is $5,000 and the useful life of the vehicle is8 years.
Hrd.4
6. Explosive Leasing acquires equipment and leases it to customers under long-term sales-type leases. Explosive earns interest under these arrangements at a 6% annual rate. Explosive purchased a device and then leased it for $342,400 under an arrangement that specified annual payments to be received for five years, beginning at the commencement of the lease. The lessee had the option to purchase the device at the end of the lease term for $49,650 when it was expected to have a residual value of $99,300. Calculate the amount of the annual lease payments. (Do not round intermediate calculations. Round your answer to nearest whole dollar amount.)The present value of $1: n = 5, i = 6% is 0.74726.The present value of an ordinary annuity of $1: n = 5, i = 6% is 4.21236.The present value of an annuity due of $1: n = 5, i = 6% is 4.46511.
me.1
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Chad Ltd negotiated a lease on the following terms: the term of the lease was 5 years; the estimated useful life of theleased equipment was 10 years; the purchase price was R60 000; and the annual lease payment was R5 000. This leaseshould be classified as_____.Select one:a.a financial leaseb.An operating leasec.neither operating nor finance leased.A finance lease