A transport Company leased 4 buses for a period of 5 years from a leasing company. The fair value of each bus is OMR 15,000 at the beginning of the lease period. The Trucks have a life time of 5 years and no residual value. As per the lease agreement, the title of the buses are to be transferred to the transport company by the end of the lease period. The annual lease payment is OMR 15,000 payable at the beginning of each year. An interest rate of 10% and straight line method of depreciation is applicable. a. Determine the type of lease b. Determine the PV of minimum lease payments? c. Prepare amortization table.
A transport Company leased 4 buses for a period of 5 years from a leasing company. The fair value of each bus is OMR 15,000 at the beginning of the lease period. The Trucks have a life time of 5 years and no residual value. As per the lease agreement, the title of the buses are to be transferred to the transport company by the end of the lease period. The annual lease payment is OMR 15,000 payable at the beginning of each year. An interest rate of 10% and straight line method of depreciation is applicable. a. Determine the type of lease b. Determine the PV of minimum lease payments? c. Prepare amortization table.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A transport Company leased 4 buses for a period of 5 years from a leasing company. The fair value of each bus is OMR 15,000 at the beginning of the lease period. The Trucks have a life time of 5 years and no residual value. As per the lease agreement, the title of the buses are to be transferred to the transport company by the end of the lease period. The annual lease payment is OMR 15,000 payable at the beginning of each year. An interest rate of 10% and straight line method of depreciation is applicable.
a. Determine the type of lease
b. Determine the PV of minimum lease payments?
c. Prepare amortization table.
d. Record journal entries in the books of transport company
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education