eased assets have an expected life of 5 years Depreciation is straight line Annual leasee payment is $1,400 Interest rate is 12% 1) Find the present value of the stream of leease payments in Exhibit. This is the Beginning-Year Liabilit

eased assets have an expected life of 5 years Depreciation is straight line Annual leasee payment is $1,400 Interest rate is 12% 1) Find the present value of the stream of leease payments in Exhibit. This is the Beginning-Year Liabilit

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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Need help with subparts b-d Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $33,600 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following: The fair value of the equipment is $225,000. The applicable discount rate is an 8 percent annual rate. The economic life of the asset is 10 years. Krawczek does not guarantee the residual value of the asset at the end of the lease, and it does not expect to keep the asset at the end of the term. The asset is a standard piece of equipment. a. Is the lease an operating lease or a financing lease? multiple choice Operating lease Financing lease b. What will be the lease expense shown on the income statement at the end…
Present Value Calculation Amortization Schedule Journal entries Please include all steps of calcualtions for my reference. Thanks!
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $247,570. Other information: Lease term Annual payments Life of asset 4 years $71,000 on January 1 each year Incremental rate 4 years Fair value of asset Implicit interest rate 10% $247,570 10% There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)
with remaining life of 10 years and immediately leased it Annual rental payable at the end of each year Problem 15-13 (IFRS) At the beginning of current year, an entity sold an equipment back for 4 years at the prevailing market rental. Sale price at fair value Carrying amount of equipment 6,000,000 4,500,000 800,000 Implicit interest rate Present value of an ordinary nnuity of 1 at 10% for four periods 10% 3.17 1 What is the initial lease liability? a. 2,536,000 b. 3,200,000 c. 3,000,000 d. 2 What is the cost of right of use asset? a. 1,902,000 b. 2,598,000 c. 2,536,000 d. 3. Whta is the gain on right transferred? a. 866,000 b. 634,000 c. 750,000 d. 4. What is the annual depreciation of the lessee? a. 475,500 b. 190,200 c. 634,000 d. 253,600
QUESTION 1 Assume a company (lessee) signs a lease for a forklift with the following predicates: Fair value of the forklift is $16,000 Lease term is 3 years Monthly payments of $500/month paid in advance $50 of the monthly payment is related to the maintenance Interest rate a bank would charge this company for a $16,000 loan over 3 years is 4% of the Useful Life of the forklift is 5 years Required: At the end of the lease term, the company can purchase the forklift for $1,000, which is the estimated fair value at the end of the lease
Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor's implicit rate when calculating annual rental payments was 10%. d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor. Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end under each of the following three independent assumptions: 1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $100,000 to acquire the asset. Also assume that adjusting the lease receivable (net investment) by initial direct costs reduces the effective rate of interest to…
ok nt ences A finance lease agreement calls for quarterly lease payments of $7,056 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 12%. Both the present value of the lease payments and the cost of the asset to the lessor are $168,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a partial amortization table up to the October 1 payment. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date July 1 July 1 October 1 Lease Payment Effective Interest Decrease in Outstanding balance balance Required B >
A lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over a six-year lease term (also the asset's useful life with the first payment at January 1, the beginning of the lease. The interest rate is 5% FV of $1 PV of $1 FVA of PVA of $1, FVAD of $1 and PVAD of $t) (Use appropriate factor(s) from the tables provided.) 1 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? Complete this question by entering your answers in the tabs below. Required A Required B Complete the amortization schedule for the first two payments. (Enter all amounts as positive values.) Lease Payment Effective Interest Decrease in Outstanding Date 01/01/2016 01/01/2016 01/01/2017 Balance Balance Required B >
Lease facts: Date of lease – 6/1/19 Term – 3 years (expires 6/1/22) Semi-annual lease payments of $100,000 every 6/1 and 12/1 Lessee’s incremental borrowing rate – 6% Lessor’s implicit rate of return – 5% (NOT known to lessee) Lessor’s cost of asset leased - $250,000 Guaranteed residual value - $70,000 (lessee believes fair value of the asset at the end of the lease will be greater than $70,000). Lessee and Lessor both have a December 31st Requirements: Assume the lease is treated as a finance lease: Determine the present value of the lease payments Prepare an amortization table for the lease payments for the lessee Prepare all of the lessee’s required journal entries for 2019 and 2020 Determine the fair value of the lease from the lessor’s perspective Prepare the lessor’s amortization table for this lease Prepare all of the lessor’s required journal entries for 2019 and 2020
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BNM Itd. Acquired on asset of Rs. 440,000 through a finance lease agreement pn 1-1-2018 with no residual value. The lease term is five years with annual lease rentals of Rs. 100,000 payable at the start of each year. The implicit rate of interest is 10%. Calculate: al Gross investment in lease b. Net investment in lease C. Uneared finance income Lease amortization schedule d.