An asset with a cost of $80,000 is leased on 1/1/x1. The lease is a sales-type lease for the lessor. Six annual lease payments are due on December 31 beginning on 12/31/x1. The asset will have no residual value. The lessor sets a rate of return of 8% and charges the lessee annual lease payments of $20,550. Present value factor of an ordinary annuity for six years at 8% Present value factor of an annuity due for six years at 8% 4.62288 4.99271 .63017 Present value factor of a single sum for a six-year term at 8% n the journal entry at the inception of the lease under the gross method, what amount does the lessor credit to unearned interest?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Cop

An asset with a cost of $80,000 is leased on 1/1/x1. The lease is a sales-type lease for the lessor. Six annual lease payments are due on December 31 beginning on
12/31/x1. The asset will have no residual value. The lessor sets a rate of return of 8% and charges the lessee annual lease payments of $20,550.
Present value factor of an ordinary annuity for six years at 8%
Present value factor of an annuity due for six years at 8%
Present value factor of a single sum for a six-year term at 8%
In the journal entry at the inception of the lease under the gross method, what amount does the lessor credit to unearned interest?
Group of answer choices
A. $28,300
D. $43,300
B. $95,000
C. $123,300
4.62288
4.99271
.63017
Transcribed Image Text:An asset with a cost of $80,000 is leased on 1/1/x1. The lease is a sales-type lease for the lessor. Six annual lease payments are due on December 31 beginning on 12/31/x1. The asset will have no residual value. The lessor sets a rate of return of 8% and charges the lessee annual lease payments of $20,550. Present value factor of an ordinary annuity for six years at 8% Present value factor of an annuity due for six years at 8% Present value factor of a single sum for a six-year term at 8% In the journal entry at the inception of the lease under the gross method, what amount does the lessor credit to unearned interest? Group of answer choices A. $28,300 D. $43,300 B. $95,000 C. $123,300 4.62288 4.99271 .63017
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Lease accounting
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
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education