20. I MISS HIGH SCHOOL INC.leased a machine fromANYARE SA COLLEGE LTD. onJanuary 01, 2019. The firstannual payment was made onJanuary 01, 2020. Themachine has an economic lifeof six years. The leaseagreement requires fourannual payments of P33,000,including P3,000 annualpayment for repairs andmaintenance. At the end of thelease term, the machine will bereturned to ANYARE SACOLLEGE LTD. A residual valuein the amount of P5,000 hasbeen guaranteed by I MISSHIGH SCHOOL INC. Interestimplicit in the lease is 10%which is known to I MISS HIGHSCHOOL INC. I 21. Use the same informationin MC 20. How much annualdepreciation expense shouldMISS HIGH SCHOOL INC.record?a. P24,628O b. P16,419O c. P23,378O d. P15,585

Depreciation expense is that part of the asset which is considered as consumed during the current…

Answered: 20. I MISS HIGH SCHOOL INC. leased a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On January 1, 2020 Arab Company leases a machine from GMC Corp. with 8 years useful life. The lease term is six-year requires payment of $87,000 at the beginning of each year. The incremental borrowing rate for the lessee is 10%; the lessor's implicit rate is 8% and is known by the lessee. If the fair value of the machine is $520.000, and the machine will be reverting to GMC Corp at the end of lease term. The present value of an annuity due of 1 for six years at 10% is 4.79079. The present value of an annuity due of 1 for six years at 8% is 4.99271. The annual depreciation for the leased machine at Arab Corp. as lessee is closed to: a. $43,366. b. $48,661. c. $72,394. d. $54,295.
Myro Company leased a new machine from Myie Corp. on May 1, 2014 under a lease with the following information: Annual rental payable at beginning of each lease year P 400,000; Lease term 10 years Useful life of machine 12 years Implicit interest rate 14% Present Value of an annuity of 1 advance for 10 periods at 10 periods at 14%. 0.27 Myro has the option to purchase the machine on May 1, 2024, by paying P 500,000, which approximate the expected fair value of the machine on the option exercise date. On May 1, 2014, how much should Myro record the leased asset?
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
On January 2, 2019, Charminster Corporation leased six computers for use in its engineering department. The lease period is five years and the estimated economic life of the leased property is six years. The lease does not contain automatic title transfer and a bargain purchase option. Annual lease payments are payable in advance every January 2 in the amount of P90,000. The incremental borrowing rate for Charminster Corporation is 12% and the implicit interest rate (known to Charminster) is 10%. The company uses straight-line depreciation for this type of equipment. (Use two decimal places for the PV factors) 1. What is the capitalized cost of the right of use asset? 2. How much is the interest expense recognized in profit of loss for the year 2019?
*attached is the problem REQUIRED: What is the lease liability on Dec. 31, 2020? What is the lease liability to be reported as non-current on Dec 31, 2020? What is the interest expense for 2020? What is the depreciation for 2020?
NutraLabs, Incorporated, leased a protein analyzer to Werner Chemical, Incorporated, on September 30, 2024. NutraLabs manufactured the machine at a cost of $5.1 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $385,022, payable each September 30, December 31, March 31, and June 30, with the first payment on September 30, 2024. NutraLabs’ implicit interest rate is 16%. The useful life of the equipment is five years. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Determine the price at which NutraLabs is “selling” the equipment (present value of the lease payments) on September 30, 2024. What pretax amounts related to the lease would NutraLabs report in its balance sheet on December 31, 2024? What pretax amounts related to the lease would NutraLabs report in its income statement for the year ended December 31, 2024? What pretax amounts related to the lease…
13. Concord Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $162,000 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires five equal annual rentals of $54,800 payable each December 31, beginning December 31, 2019. An interest rate of 6% is implicit in the lease agreement. Collectibility of the rentals is not probable.Prepare any journal entry for Concord on December 31, 2019. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
North Blue Company leased a new copier from Kixko Company on June 1, 2019, under a lease with the following information: Lease term 10 years Annual rental payable at the beginning of each lease year $45,000 Useful Life of machine 10 years Implicit interest rate 12% Present value factor for an annuity of 1 in advance for 10 periods at 12% 6.3282 Present Value factor for 1 for 10 periods at 12% 0.32197 North Blue has the option to purchase a machine on June 1, 2023, by paying $75,000, which approximates the fair value of the machine on the option exercise date. On May 1, 2019, North Blue should record a right-of-use asset in the amount of a.$284,769. b.$292,991. c.$450,000. d.$276,548.
Canada M. manufactures special equipment with an estimated economic life of 12 years and leases it to Phranka for a period of 10 years commencing January 1, 2021. The unguaranteed residual value at the end of the lease term is estimated to be $15,000. Phranka will make annual payments of $25,000 at the beginning of each year and pay for all maintenance and insurance costs. Canada M. incurred costs of $105,000 in manufacturing the equipment but is looking to make a profit on the sale of equipment. In addition, Phranka incurred $7000 in costs tied to negotiating and closing the lease. Canada M. has determined that the collectability of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicit interest rate is 8%. Phranka has a borrowing rate of 8%. How should Canada M. classify this lease transaction? a. Classify as an operating lease. b. Classify as a capital, sales type lease. c. Classify as a capital, direct finance type lease.…
Please kindly answer. Thankyou
Rajiv Industries leased exercise equipment to Woodson Gyms on July 1, 2024. Rajiv recorded the lease receivable at $810,000, the present value of lease payments discounted at 10% and fair value of the equipment. The lease called for ten annual lease payments of $120,000 due at the beginning of each year. The first payment was received on July 1, 2024. Rajiv had manufactured the equipment at a cost of $750,000. With this lease agreement, control is considered to be transferred to the lessee at the beginning of the lease. What is the total increase in earnings (pretax) on Rajiv’s 2024 income statement?

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