Homework Help is Here – Start Your Trial Now!
Business
Finance
2$ 16,261.96 e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. 2$ 124,098.0 f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. $ 124,098

2$ 16,261.96 e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. 2$ 124,098.0 f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. $ 124,098

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question

The last two please.

Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $80,000. HPB will need it for only 5 years even though the compressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 5 years with $40,000 lease payments at the end of each year. HPB's cost of debt is 11%. Answer the following questions. (Hint: See Table 19-1.) a. What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ 147,835.88 b. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent. $ 147,835.88 c. What will HPB report as the Year-1 lease expense? Round your answer to the nearest cent. Enter your answer as a positive value. $ 40,000 d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ 16,261.96 e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. 124,098.0 f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. $ 124,098
Transcribed Image Text:Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $80,000. HPB will need it for only 5 years even though the compressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 5 years with $40,000 lease payments at the end of each year. HPB's cost of debt is 11%. Answer the following questions. (Hint: See Table 19-1.) a. What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ 147,835.88 b. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent. $ 147,835.88 c. What will HPB report as the Year-1 lease expense? Round your answer to the nearest cent. Enter your answer as a positive value. $ 40,000 d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ 16,261.96 e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. 124,098.0 f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. $ 124,098
TABLE 19-1 Financial Reporting for Leases Part 1: Preliminary Calculations Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Imputed interest expense $1,604 $1,100 $566 Lease payment $10,000 $10,000 $10,000 Part 2: Reporting an Operating Lease Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Right-of-use asset balance $26,730 $18,334 $9,434 $0 Lease expense" $10,000 0,000 $10,000 Part 3: Reporting a Finance Lease Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Right-of-use asset balance $26,730 $17,820 $8,910 $0 Interest expense Amortization expense $1,604 $1,100 $566 $8.910 $8,910 $8,910 Total lease expense $10,514 $10,010 $9,476
Transcribed Image Text:TABLE 19-1 Financial Reporting for Leases Part 1: Preliminary Calculations Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Imputed interest expense $1,604 $1,100 $566 Lease payment $10,000 $10,000 $10,000 Part 2: Reporting an Operating Lease Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Right-of-use asset balance $26,730 $18,334 $9,434 $0 Lease expense" $10,000 0,000 $10,000 Part 3: Reporting a Finance Lease Year 0 Year 1 Year 2 Year 3 Lease liability balance $26,730 $18,334 $9,434 $0 Right-of-use asset balance $26,730 $17,820 $8,910 $0 Interest expense Amortization expense $1,604 $1,100 $566 $8.910 $8,910 $8,910 Total lease expense $10,514 $10,010 $9,476
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS