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Air Atlantic (AA) has been offered a 3-year old jet airliner under a 12-year lease arrangement. The lease requires AA to make annual lease payments of $500,000 at the beginning of each of the next 12 years. Determine the
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- A lease agreement that qualifies as a finance lease calls for annual lease payments of $50,000 over a four-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 7%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $144,000. Required: a. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). b. Create a partial amortization table through the second payment on January 1, Year 2. c. What would be the increase in earnings that the lessor would report in its income statement for the first year ended December 31 (ignore taxes)? 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) Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the price at which the lessor is "selling" the asset (present value…A lease agreement that qualifies as a finance lease calls for annual lease payments of $20,000 over a eight-year lease term (also the asset’s useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 4%. Required: Complete the amortization schedule for the first two payments. If the lessee’s fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable?A contract has been signed to lease a building at P30, 000 per year with an annual increase of P1, 000 for 5 years. Payments are to be made at the end of each year from now. The prevailing interest rate is 7%. What is the lump sum paid today would be equivalent to the 5-year lease payment plan? whats the correct answer a. P130, 652.59 b. P142, 470.28 c. P137.952.69 d. P157, 609.38
- To lease the car then purchase at the end of the five-year lease. The purchase price is $19,894. The sales tax rate is 15%. The interest rate for leasing the car is 7.49%. The monthly lease payment, including the sales tax, is $324.70. The residual value of the vehicle at the end of the lease term is $8,296.85. Initial amount due at signing: First monthly payment. Based on the information above, calculate the following; a).Initial payment due at signing. b). Total of all monthly payments. c). Residual cost at conclusion of lease. This is what you pay if you decide to purchase the vehicle, so it will include sales tax. d). Total cost if you lease then purchase at the end of the five-year lease.A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a eight-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 4%. Required: a. Complete the amortization schedule for the first two payments. b. If the lessee's fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable? 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) Complete this question by entering your answers in the tabs below. Required A Required B Complete the amortization schedule for the first two payments. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date January 1, Year 1 January 1, Year 1 January 1, Year 2 $ Lease Payment 40,000 $ Effective…) On January 1, 2022, Buxton Corp. signed a 6 year lease. Buxton Corp. will make payments of $96,525 each year on January 1st, with the first payment made on the day the lease was signed. If the lease payments had an initial present value of $462,431 and Buxton Corp.'s incremental interest rate is 10%, how much interest expense will the company recognize on its 2022 income statement from this finance lease? (IFO 13 & 15) ○ $46,243 O $36,591 O $0 O $96,525
- WITH SOLUTION/COMPUTATION 59. On December 30, 2019, Rafferty Corp. leased equipment. Annual lease payments of P20,000 are due December 31 for 10 years. The equipment’s useful life is 10 years, and the interest rate implicit in the lease is 10%. The present value of the lease payments on December 30, 2019 before the first lease payment is P135,000. The first lease payment was made on that date. What amount should Rafferty include in current liabilities for this lease in its December 31, 2019, balance sheet?a. 6,500 b. 8,500 c. 11,500 d. 20,000A lease agreement that qualifies as a finance lease calls for annual lease payments of $25,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 5%. Required: Complete the amortization schedule for the first two payments. If the lessee's fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable? 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)Bishop Sheen Hospital is evaluating a lease arrangement for its ambulance fleet. The total value of the lease is $620,000. The hospital will be making equal monthly payments starting today. What is the monthly interest rate if the lease payments are $50,000 per month for 24 months? What is the monthly interest rate if the lease payments are $50,000 per month for 36 months? What is the monthly interest rate if the lease payments are $60,000 per month for 36 months?
- Give me answer with explanation4. Robbins, Inc., leased a machine from Ready Leasing Co. The lease requires 10 annual payments of P10,000 beginning immediately. The lease specifies an interest rate of 12% and a purchase option of P10,000 at the end of the tenth year, even though the machine’s estimated value on that date is P20,000. It reasonably certain that Robbins will exercise the purchase option. Robbins’ incremental borrowing rate is 14%. What amount should Robbins record the right-of-use asset at the beginning of the lease term? 5. On January 1, 20x7, Babson, Inc., leased two automobiles for executive use. The lease requires Babson to make five annual of P13,000 beginning January 1, 20x7. At the end of the lease term, Babson guarantees the residual value of the automobiles will total P10,000. The interest rate implicit in the lease is 9%. Babson's recorded lease liability on initial 6. On January, 20x8, Harrow Co. as lessee signed a five-year non-cancelable equipment lease with annual payments of…A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 7% Required: a. Complete the amortization schedule for the first two payments. b. If the lessee's fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable? Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1, PVA of $1. EVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required A Required B Complete the amortization schedule for the first two payments. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date Lease Payment Effective Interest January 1, Year 1 January 1, Year 1 January 1, Year 2…
