E 15-26 Lease concepts; finance/sales- type leases; guaranteed and unguaranteed residual value .LO15-2, LO15-6 Each of the four independent situations below describes a sales-type lease in which annual lease payments of $100,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Determine the following amounts at the beginning of the lease: A. The lessor's: 1. Lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Lease payments 5. Right-of-use asset 6. Lease liability Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee 1 7 9% 0 0 Situation 2 7 11% $50,000 0 3 8 10% $8,000 $8,000 4 8 12% $50,000 $60,000

E 15-26 Lease concepts; finance/sales- type leases; guaranteed and unguaranteed residual value .LO15-2, LO15-6 Each of the four independent situations below describes a sales-type lease in which annual lease payments of $100,000 are payable at the beginning of each year. Each is a finance lease for the lessee. Determine the following amounts at the beginning of the lease: A. The lessor's: 1. Lease payments 2. Gross investment in the lease 3. Net investment in the lease B. The lessee's: 4. Lease payments 5. Right-of-use asset 6. Lease liability Lease term (years) Lessor's and lessee's interest rate Residual value: Estimated fair value Guaranteed by lessee 1 7 9% 0 0 Situation 2 7 11% $50,000 0 3 8 10% $8,000 $8,000 4 8 12% $50,000 $60,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 1 lease Indicate each of the following statements as true or false. 1.→Lease Term refers to the fixed and cancelable term of the lease. 2.→Henry Company leases machines to Zoe Company. The contract states that the lease term is two years, with a rental payment of $10,000 per month. If Zoe continues to rent after the two-year term, the rental payment will be reduced to $1,000 per month for another two years. In this case, the real lease term is two years. 3.→Leasing equipment reduces the risk of obsolescence to the lessee and in many cases passes the risk of residual value to the lessor< 4.-In the event that it is practicable to determine the implicit rate, the lessee uses its incremental borrowing rate. 5.-If a lease does not transfer control of the asset over the lease term, the lessor will- generally account for the lease as a sales-type lease.
t27 In IFRS 16 par. 74, initial direct costs incurred by a lessor in consummating a manufacturer’s or dealer’s lease areA. charged to unearned income in the first period of the lease term.B. charged to expense in the first period of the lease term.C. deferred and allocated over the lease term in proportion to the recognition of rent revenue.D. deferred and allocated over the lease term on a straight-line basis.
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Owefix a. compute the amount of lease receiveable for the leaseb. discusd the bethre of the leasec. prepara an amoritization table for the lessee and lessor
2...new.continue...c The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Crane Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $104,218 Residual value of equipment at end of lease term, guaranteed by the lessee $51,000 Expected residual value of equipment at end of lease term $46,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $540,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Suppose Crane received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? Right-of-use asset $enter a…
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Problem 15-9 (Algo) Lease concepts; sales-type leases; guaranteed and unguaranteed residual value [LO15-2, 15-6] Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: eaved Each of the four independent situations below describes a sales-type lease in which annual lease payments of $16,000 are payable at the beginning of each year. Each is a finance lease for the lessee. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Guaranteed by lessee. Unguaranteed Purchase option: After (years) Exercise price. Reasonably certain? 1 4 4 11% e e none n/a n/a Situation 2 4 5 11% $ 6,400 0 www www 3 $8,200 no 3 4 5 11% $3,200 $3,200 $2,200 no Next 4 4 7 11% Save & Exit Submit 8 $.6,400 $4,200 yes Activate Windows
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Example 1 and 2 answers please
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