Delaney Company leases an automobile with a fair value of $10,000 from Simon Motors, Inc., on the following terms.1.2.Rental of $200 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.)Delaney guarantees a residual value of $1,180 (the present value at 0.5% per month is $920). Delaney expects the probableresidual value to be $1,180 at the end of the lease term.Estimated economic life of the automobile is 60 months.5. Delaney's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown.3.4.Non-cancelable term of 50 months.Click here to view factor tables.(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)(a)(b)X Your answer is incorrect.What is the present value of the lease payments to determine the lease liability? (Round answer to O decimal places, e.g. 5,275.)Present value of the lease payments$2860200

Lease is an agreement whereby the lessor gives lessee the right to use a particular asset and in…

Answered: Delaney Company leases an automobile…

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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Schrute Company leases an automobile with a fair value of $15,005 from Rainn, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $300 per month (at the beginning of each month). 3. Schrute guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). The expected residual value is estimated to be $1,800 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Schrute’s incremental borrowing rate is 6% a year (0.5% a month). Rainn’s implicit rate is unknown. Present Value of an Annuity Due with 0.5% and 60 periods: 51.98419 Present Value of an Ordinary Annuity at 0.5% and 60 periods: 48.17337352 Present Value of an Annuity Due with 0.5% and 50 periods: 44.36350 Present Value of an Ordinary Annuity with 0.5% and 50 Periods:41.56644707 The entry to record the first month’s lease payment (at commencement of the lease) would include: a) a debit to interest expense in the amount of $300.…
Schrute Company leases an automobile with a fair value of $15,005 from Rainn, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $300 per month (at the beginning of each month). 3. Shrute guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). The expected residual value is estimated to be $1,800 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Schrute’s incremental borrowing rate is 6% a year (0.5% a month). Rainn’s implicit rate is unknown. What is the present value of the lease payments to determine the lease liability? Present Value of an Annuity Due with 0.5% and 60 periods: 51.98419 Present Value of an Ordinary Annuity at 0.5% and 60 periods: 48.17337352 Present Value of an Annuity Due with 0.5% and 50 periods: 44.36350 Present Value of an Ordinary Annuity with 0.5% and 50 Periods:41.56644707
Delaney Company leases an automobile with a fair value of $10,000 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $200 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) 3. Delaney guarantees a residual value of $1,180 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,180 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Delaney’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. What is the present value of the lease payments to determine the lease liability?
Teal Mountain Company leases an automobile with a fair value of $20,014 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $410 per month (at the beginning of each month). (The present value at 0.5% per month is $18,190.) 3. Teal Mountain guarantees a residual value of $1,840 (the present value at 0.5% per month is $1,434). Teal Mountain expects the probable residual value to be $1,840 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Teal Mountain’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. Record the first month’s lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount…
Teal Mountain Company leases an automobile with a fair value of $20,014 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $410 per month (at the beginning of each month). (The present value at 0.5% per month is $18,190.) 3. Teal Mountain guarantees a residual value of $1,840 (the present value at 0.5% per month is $1,434). Teal Mountain expects the probable residual value to be $1,840 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Teal Mountain’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. Again, I've recognized this is a finance lease... but I need help with the next step.... What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments $
Teal Mountain Company leases an automobile with a fair value of $20,014 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $410 per month (at the beginning of each month). (The present value at 0.5% per month is $18,190.) 3. Teal Mountain guarantees a residual value of $1,840 (the present value at 0.5% per month is $1,434). Teal Mountain expects the probable residual value to be $1,840 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Teal Mountain’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. CAN I GET SOME HELP WITH THIS PART PLEASE? THANKS IN ADVANCE!! Based on the original fact pattern, record the lease on Teal Mountain’s books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit…
Larkspur Company leases an automobile with a fair value of $20,991 from Matthew Motors, Inc., on the following terms. 1. 2. 3. Non-cancelable term of 50 months. Rental of $440 per month (at the beginning of each month). (The present value at 0.5% per month is $19,520.) Larkspur guarantees a residual value of $1,330 (the present value at 0.5% per month is $1,036). Larkspur expects the probable residual value to be $1,330 at the end of the lease term. Estimated economic life of the automobile is 60 months. 5. Larkspur's incremental borrowing rate is 6% a year (0.50% a month). Matthew's implicit rate is unknown. 4. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer has been saved. See score details after the due date. What is the nature of this lease to Larkspur? The nature of this lease is a/an finance ◆ lease. (b) List of Accounts Attempts: 1 of 1 used What is the present value of the lease…
Sage Hill Company leases an automobile with a fair value of $12,257 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $250 per month (at the beginning of each month). 3. Sage Hill guarantees a residual value of $1,190. Delaney expects the probable residual value to be $1,190 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Sage Hill’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. Click here to view factor tables. (a) What is the nature of this lease to Sage Hill? The nature of this lease is a/an select a nature of the lease lease. eTextbook and Media List of Accounts Attempts: 2 of 3 used What is the present value of the lease payments to determine the lease liability?
Splish Brothers Company leases an automobile with a fair value of $13,924 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $280 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) 3. Splish Brothers guarantees a residual value of $1,580 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,580 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Splish Brothers’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. Click here to view factor tables.(For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the nature of this lease to Splish Brothers? The nature of this lease is a/an select a nature of the lease…
Splish Brothers Company leases an automobile with a fair value of $13,924 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months.2. Rental of $280 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.)3. Splish Brothers guarantees a residual value of $1,580 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,580 at the end of the lease term.4. Estimated economic life of the automobile is 60 months.5. Splish Brothers’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. Click here to view factor tables.(For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Collapse question part(a) What is the nature of this lease to Splish Brothers? The nature of this lease is a/an select a nature of the leasefinancelease. Collapse question part(b) What is the present value of the lease payments to determine…
Splish Brothers Company leases an automobile with a fair value of $13,924 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months.2. Rental of $280 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.)3. Splish Brothers guarantees a residual value of $1,580 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,580 at the end of the lease term.4. Estimated economic life of the automobile is 60 months.5. Splish Brothers’s incremental borrowing rate is 6% a year (0.5% a month). Simon’s implicit rate is unknown. Click here to view factor tables.(For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Collapse question part(a) What is the nature of this lease to Splish Brothers? The nature of this lease is a/an select a nature of the leasefinancelease. Collapse question part(b) What is the present value of the lease payments to determine…
Delaney AG leases an automobile with a fair value of €10,000 from Simon Motors, on the following terms. Non-cancelable term of 50 months. Rental of €200 per month (at the beginning of each month). (The present value at 0.5% per month is €8,873.) Delaney guarantees a residual value of €1,180 (the present value at 0.5% per month is €920). Delaney expects the probable residual value to be €1,180 at the end of the lease term. Estimated economic life of the automobile is 60 months.5. Delaney's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. Instructions What is the present value of the lease payments to determine the lease liability? Based on the original fact pattern, record the lease on Delaney's books at the date of commencement. Record the first month's lease payment (at commencement of the lease). Record the second month's lease payment. Record the first month's amortization on Delaney's books (assume straight-line). 4. Suppose…

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