Assume that Schindler Builders leases medical equipment from Saint Michael's Machine Company. (Click the icon to view the terms of the lease.) Requirement a. Determine the lessee's initial measurement of the lease liability and the right-of-use asset. Note that the initial measurement is the same for both operating and finance leases. Before completing the requirement, identify the present value of the lease payments. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculation. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest whole dollar.) The present value (PV) of the payments due under the lease is Now determine the balance of the right-of-use asset. (If an input field is not used in the table leave the input field empty, do not select a label or enter a zero.) Add: Add: Subtract: Subtract: Initial measurement of the right-of-use asset Requirement b. Prepare all journal entries necessary in order for Schindler to record the transactions described in the facts provided. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by preparing the entry to record the $37,000 prepayment Schindler made to the lessor on December 31, 2021. Account December 31, 2021 Assume that Schindler Builders leases medical equipment from Saint Michael's Machine Company (Click the icon to view the terms of the lease.) Requirements More info X a. Determine the lessee's initial measurement of the lease liability and the right-of-use asset. Note that the initial measurement is the same for both operating and finance leases. b. Prepare all journal entries necessary in order for Schindler to record the transactions described in the facts provided. The lease term is for 6 years, and Schindler must pay six annual rentals of $37,000 beginning on January 1, 2022, of the current year and every January 1 afterward. The implicit rate in the lease is 4%. Schindler prepaid Saint Michael's Machine Company the first payment of $37,000 on December 31, 2021 (the date the lease is executed, which is prior to the lease commencement date). Schindler received $19,000 from Saint Michael's Machine Company on the commencement date as an incentive to enter the lease agreement. Schindler incurred initial direct costs of $6,000 that were originally recorded as prepaid initial direct costs on December 31, 2021. The equipment has no residual value. Add: Add: Print Done Print Done - X

Assume that Schindler Builders leases medical equipment from Saint Michael's Machine Company. (Click the icon to view the terms of the lease.) Requirement a. Determine the lessee's initial measurement of the lease liability and the right-of-use asset. Note that the initial measurement is the same for both operating and finance leases. Before completing the requirement, identify the present value of the lease payments. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculation. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest whole dollar.) The present value (PV) of the payments due under the lease is Now determine the balance of the right-of-use asset. (If an input field is not used in the table leave the input field empty, do not select a label or enter a zero.) Add: Add: Subtract: Subtract: Initial measurement of the right-of-use asset Requirement b. Prepare all journal entries necessary in order for Schindler to record the transactions described in the facts provided. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by preparing the entry to record the $37,000 prepayment Schindler made to the lessor on December 31, 2021. Account December 31, 2021 Assume that Schindler Builders leases medical equipment from Saint Michael's Machine Company (Click the icon to view the terms of the lease.) Requirements More info X a. Determine the lessee's initial measurement of the lease liability and the right-of-use asset. Note that the initial measurement is the same for both operating and finance leases. b. Prepare all journal entries necessary in order for Schindler to record the transactions described in the facts provided. The lease term is for 6 years, and Schindler must pay six annual rentals of $37,000 beginning on January 1, 2022, of the current year and every January 1 afterward. The implicit rate in the lease is 4%. Schindler prepaid Saint Michael's Machine Company the first payment of $37,000 on December 31, 2021 (the date the lease is executed, which is prior to the lease commencement date). Schindler received $19,000 from Saint Michael's Machine Company on the commencement date as an incentive to enter the lease agreement. Schindler incurred initial direct costs of $6,000 that were originally recorded as prepaid initial direct costs on December 31, 2021. The equipment has no residual value. Add: Add: Print Done Print Done - X

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 6MC: The lessee compares the present value of owning the equipment with the present value of leasing it....

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