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Click here to view factor tables. How would Wildhorse (lessor) and Windsor (lessee) classify this lease? Wildhorse would classify the lease as a Windsor would classify the lease as a sales-type finance lease. lease. How would Wildhorse initially measure the lease receivable, and how would Windsor initially measure the lease liability and right-of- use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.)

Click here to view factor tables. How would Wildhorse (lessor) and Windsor (lessee) classify this lease? Wildhorse would classify the lease as a Windsor would classify the lease as a sales-type finance lease. lease. How would Wildhorse initially measure the lease receivable, and how would Windsor initially measure the lease liability and right-of- use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Wildhorse Company leases a building to Windsor, Inc. on January 1, 2025. The following facts pertain to the lease agreement. 1. 2. 3. 4. 5. The lease term is 5 years, with equal annual rental payments of $3,413 at the beginning of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. The building has a fair value of $18,500, a book value to Wildhorse of $8,325, and a useful life of 6 years. At the end of the lease term, Wildhorse and Windsor expect there to be an unguaranteed residual value of $3,810. Wildhorse wants to earn a return of 5% on the lease, and collectibility of the payments is probable. Windsor was unaware of the implicit rate used in the lease by Wildhorse and has an incremental borrowing rate of 6%. Click here to view factor tables. How would Wildhorse (lessor) and Windsor (lessee) classify this lease? Wildhorse would classify the lease as a Windsor would classify the lease as a finance Lease receivable $ sales-type How would Wildhorse initially measure the lease receivable, and how would Windsor initially measure the lease liability and right-of- use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.) Present value of rental payments $ Lease liability/Right-of-use asset $ lease. lease. Wildhorse Windsor 17762 14777 14377
Transcribed Image Text:Wildhorse Company leases a building to Windsor, Inc. on January 1, 2025. The following facts pertain to the lease agreement. 1. 2. 3. 4. 5. The lease term is 5 years, with equal annual rental payments of $3,413 at the beginning of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. The building has a fair value of $18,500, a book value to Wildhorse of $8,325, and a useful life of 6 years. At the end of the lease term, Wildhorse and Windsor expect there to be an unguaranteed residual value of $3,810. Wildhorse wants to earn a return of 5% on the lease, and collectibility of the payments is probable. Windsor was unaware of the implicit rate used in the lease by Wildhorse and has an incremental borrowing rate of 6%. Click here to view factor tables. How would Wildhorse (lessor) and Windsor (lessee) classify this lease? Wildhorse would classify the lease as a Windsor would classify the lease as a finance Lease receivable $ sales-type How would Wildhorse initially measure the lease receivable, and how would Windsor initially measure the lease liability and right-of- use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.) Present value of rental payments $ Lease liability/Right-of-use asset $ lease. lease. Wildhorse Windsor 17762 14777 14377
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