Coco company leases luxury equipment to its clients under sales-type leases. Coco's equipment has no residual value at the end of lease and the leases do not contain purchase options. Coco wants an annual return of 12% interest on a seven-year lease of equipment with a fair value of $ 720,651,000. The first lease payment must be made immediately in the beginning of lease term. What is the total amount of interest revenue that Coco will earn over the life of the lease?
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- Roger Company leases a computer equipment under a direct financing lease. The equipment has no residual value at the end of the lease and the lease does not contain bargain purchase option. The entity wishes to earn 8% interest on a 5-year lease of equipment with a cost of P 3,234,000. The present value of an annuity due of 1 at 8% for 5 years is 4.312. What total amount of interest revenue should be recognized over the lease term? Show your solution.Jagadison Company leases computer equipment to customers under sales-type leases. The equipment has no residual value at the end of the lease and the leases do not contain purchase options. Jagadison desires a return of 6% Interest on a five-year lease of equipment with a fair value of $794,770. The present value of an annuity due of $1 at 6% for five years is 4.465. What is the total amount of interest revenue that Jagadison will earn over the life of the lease? Multiple Cholce $95.230 $178,000 $238,431 $158,054The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 18,500 Year 2: $ 23,500 Year 3: $ 28,500 Year 4: $ 33,500 An appropriate discount rate is 7 percentage, yielding a present value of $86,637. b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset? b-2. If the lease is a finance lease, what will be the initial value of the lease liability? b-3. If the lease is a finance lease, what will be the lease expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.) b-4. If the lease is a finance lease, what will be the interest expense shown on the income statement at the end of year 1? (Round your answer to the nearest dollar amount.) b-5. If the lease is a finance lease, what will be the amortization expense shown on the income statement at the end of year 1? (Round your answer to…
- Cullumber Company has a machine with a cost of $651000 which also is its fair value on the date the machine is leased to Park Company. The lease is for 6 years and the machine is estimated to have an unguaranteed residual value of $64000. If the lessor’s interest rate implicit in the lease is 12%, the 6 beginning-of-the-year lease payments would be 127,476 108,500 134,333 141,375The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 11,500 Year 2: $ 16,500 Year 3: $ 21,500 Year 4: $ 26,500 An appropriate discount rate is 7 percentage, yielding a present value of $62,927.a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? a-2. If the lease is an operating lease, what will be the initial value of the lease liability? a-3. If the lease is an operating lease, what will be the lease expense shown on the income statement at the end of year 1? a-4. If the lease is an operating lease, what will be the interest expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.)Glade Company leases computer equipment to customers under direct financing lease. The equipment has no residual value at the end of the lease and the leases do not contain purchase option. Glade wishes to earn 8% interest on a five-year lease of equipment with a fair value of P323,400. The present value of an annuity due of P1 at 8% for 5 years is 4.312. What is the total amount of interest revenue that Glade will earn over the life of the lease? a. P51,600 b. P75,000 c. P129,360 d. P139,450
- rane Company has a machine with a cost of $642000 which also is its fair value on the date the machine is leased to Park Company. The lease is for 6 years and the machine is estimated to have an unguaranteed residual value of $63000. If the lessor’s interest rate implicit in the lease is 10%, the 6 beginning-of-the-year lease payments would beThe Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: Year 2: Year 3: Year 4: $15,500 $20,500 $25,500 $30,500 An appropriate discount rate is 7 percentage, yielding a present value of $76,475. a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? Initial value of the right-of-use asset a-2. If the lease is an operating lease, what will be the initial value of the lease liability? Initial value of the lease liabilityThe Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 11,500 Year 2: $ 16,500 Year 3: $ 21,500 Year 4: $ 26,500 An appropriate discount rate is 7 percentage, yielding a present value of $62,927. a-5. If the lease is an operating lease, what will be the amortization expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.) b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset? b-2. If the lease is a finance lease, what will be the initial value of the lease liability? b-3. If the lease is a finance lease, what will be the lease expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.) b-4. If the lease is a finance lease, what will be the interest expense shown on the income statement at the end of year 1?…
- Glade Company leases specialized computer equipment to customers under sales-type leases. The equipment has no residual value at the end of the lease term, and the leases do not contain bargain purchase options. Glade wishes to earn 8% interest on a five-year lease of equipment with a fair value of $323,400. All of Glade's leases require annual payments beginning on the first day of the lease. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided.) Required: Compute the gross lease payments receivable and total amount of interest revenue that Glade will earn over the life of the lease. (Round your intermediate calculations and final answers to 2 decimal places.)Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring equal annual payments of $344,152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life with $10,000 guaranteed residual value. The rate implicit in the lease (which is known by Pisa, Inc.) is 8%. A. Is it a financing lease or operating lease? Explain why. (You do not need to discuss all five tests). B. What are the main differences between a finance lease and operating lease? C. How much would Tower Company, the lessor, record as an initial receivable? (Hint: think PV testing amount)Sliver Limited leases an equipment from Tesco Limited under the following lease terms. The lease term is 4 years, non-cancelable and requires equal annual rental payments at the beginning of each calendar year starting 1 January 2021. Tesco Limited wants a guarantee that the residual value of the equipment at the end of the lease is at least $26,000. Sliver Limited agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $10,000 at the end of the lease term. The cost of an equipment is $230,000 and the fair value of the equipment is $350,000 on 1 January 2021. The equipment has an economic life of 5 years. Both companies depreciate all their equipment on a straight-line basis. Tesco Limited wants to earn a return of 6% on the lease and collectability of the payment is probable. Sliver Limited's incremental borrowing rate is 8%, and the implicit rate of the lessor is unknown. Required: (Round all amounts to the nearest dollar.)…