Calculate minimum lease payments for A Ltd. who took an asset on a 5 years lease from B Ltd. using thefollowing information:Payments over the lease termContingent rentCost for services given by B Ltd.Taxes to be reimbursed to B Ltd.Residual value guaranteed by A Ltd.Fair value of asset after 5 years1,000 per month*20,00040,00015,0005,0006,000Also, A Ltd. has an option to purchase the asset after a period of 5 years at 2,000. It is reasonably certain thatA Ltd. will exercise the option.RequiredCalculation Minimum Lease Payments.

The problem case focuses on calculating the minimum lease payment done by Company A Ltd. when the…

Answered: Calculate minimum lease payments for 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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Jenny Limited leases a machine with a fair value of P109,444 to Rose Limited for 5 years at an annual rental of P25,000 payable in advance and Rose Limited guarantees in full the estimated residual value of P15,000 on return of the asset. 1. What would be the interest rate implicit in the lease?
2.
Each of the four independent situations below describes a sales-type lease in which annual lease payments of $17,500 are payable at the beginning of each year. Each is a finance lease for the lessee. Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee. Unguaranteed Purchase option: After (years) Exercise price Determine the following amounts at the beginning of the lease: Note: Round your final answers to nearest whole dollar. A. The lessor's: 1. Total lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Total lease payments 5. Right-of-use asset 6. Lease liability $ 1 70,000 2 Situation 1 70,000 4 4 8% $0 $0 none 3 2 70,000 Situation 4 Reasonably certain? 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) 8% $ 7,000 $0 4 $ 8,500 no 4 5 8% $3,500 $ 3,500 $ 2,500 no 4 4 7 8% $0 $ 7,000 3 $ 4,500 yes
On January 1, 20X4, Kangaroo Inc. (KI) entered into a lease agreement contract that entitled it to use equipment. Details of the contract follow: Lease payment, including maintenance agreement Maintenance agreement included in lease payment Implicit rate in the lease (not known) Incremental borrowing rate Lease term. Economic life of equipment Guaranteed residual value Expected pay-out on residual value guarantee Option to purchase First annual payment due $85,000 $3,000 4% 5% 6 years 7 years $20,000 $6,000 No Commencement date KI's year-end is December 31. Kl elects to adopt the practical expedient available to it and not to separately report the lease and non-lease components in the contract. What is the amount that it will record for depreciation of this right-of-use asset for its year-ended December 31, 20X4? a $77.988 b $65.355 $76.247 d. $73.582.
Fitbit Ltd has leased a machine on the following terms: Date of entering lease Duration of lease 1 July 2019 5 years Life of asset years Unguaranteed residual value Lease payments inception (at the start) Annual payments (5) Implied rate 11.0 % $40,000 $60,000 $65,000 Required: Determine the Fair Value (rounded off) of the leased asset. 27:S
needed: lease liabilityright of use of assetdepreciation expenseplease use a table for explaining lease liab.
Each of the four independent situations below describes a sales-type lease in which annual lease payments a at the beginning of each year. Each is a finance lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, $1) (Use appropriate factor(s) from the tables provided.) Situation 1 2 3 Lease term (years) 7 7 8 Lessor's and lessee's interest rate Residual value: 8 128 98 11% 10% Estimated fair value 0 $50,000 $8,000 $50,000 Guaranteed by lessee 0 0 $8,000 $60,000 Determine the following amounts at the beginning of the lease. (Round your intermediate and final answers dollar amount.) Situation 2 A The lessor's: 1. Lease payments 2. Gross investment in the lease 3. Net investment in the lease The lessee's: 4. Lease payments 5. Right-of-use asset 6. Lease payable B
Use the 5 lease criteria to determine if the following lease qualifies as a Capital, Financing lease. The Sirap Co leased equipment from the lessee valued at $400,000. The lease contract has payments of $50,000 per year payable at the end of each year for 12 years. The interest rate is at 8%. The lessor will repossess the equipment at the end of the lease term. The leased equipment does not have a bargain purchase option. The leased equipment has an economic useful life of 16 years. Required: use the 5 criteria, like in illustration 15 - 4 to determine if the lease qualifies as a Capital, financing lease.
The Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance. Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings was R125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. The land would be classified as Select one: O a. a finance lease O b. an accounting lease O c. a financial lease O d. an operating lease
please show the solution
Under leases
Chad Ltd negotiated a lease on the following terms: the term of the lease was 5 years; the estimated useful life of theleased equipment was 10 years; the purchase price was R60 000; and the annual lease payment was R5 000. This leaseshould be classified as_____.Select one:a.a financial leaseb.An operating leasec.neither operating nor finance leased.A finance lease

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