Commencement date Annual lease payment beginning with June 1, 2025 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment (no salvage value) Lessor's cost Fair value of asset at June 1, 2025 Lessor's implicit rate (known to lessee) Lessee's incremental borrowing rate June 1, 2025 $19,998.50 $7,000.00 4 years 12 years $56,000 $78,999 6% 6%
Commencement date Annual lease payment beginning with June 1, 2025 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment (no salvage value) Lessor's cost Fair value of asset at June 1, 2025 Lessor's implicit rate (known to lessee) Lessee's incremental borrowing rate June 1, 2025 $19,998.50 $7,000.00 4 years 12 years $56,000 $78,999 6% 6%
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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Transcribed Image Text:The following facts pertain to a non-cancelable lease agreement between Wildhorse Leasing Company and Windsor Company, a lessee.
Commencement date
June 1, 2025
Annual lease payment beginning with June 1, 2025
$19,998.50
Bargain purchase option price at end of lease term
$7,000.00
Lease term
Economic life of leased equipment (no salvage value)
Lessor's cost
Fair value of asset at June 1, 2025
4 years
12 years
$56,000
$78,999
Lessor's implicit rate (known to lessee)
6%
Lessee's incremental borrowing rate
6%
The collectibility of the lease payments by Wildhorse is probable.
Click here to view factor tables.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
(a)
(b)
(c)
Your answer is partially correct.
Prepare a lease amortization schedule for Windsor for the 4-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.)
Date
Annual Lease Payment Plus
BPO
WINDSOR COMPANY (Lessee)
Lease Amortization Schedule
Interest on (6%)
Liability
Reduction of Lease
Liability
Lease Liability
6/1/25
$
6/1/25
6/1/26
6/1/27
6/1/28
5/31/29
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