Expert Answer Step 1 1. Following is the calculation of lease liability and right-to-use assets for T's Company: Calculation of lease liability Particulars Present Value of rental value (69,223 ×7.8017) Lease payments ((16,000 – 10,000)×0.5584) Amount $ 540,057.079 3.340.4 543,397.48 OR Lease payments Fair Value of Building Lease Liability 543,397 548,990 543,397 Note: 1. Present value of Annuity Due at 6%, 10 years is 7.8017. Present Value at 6%, 10 year is 0.5584. Calculation of right-to-use assets Particulars Amount Fair Value of Building Add: Lease Payment made before the commencement Add: Initial Direct Cost Less: Lease Incentives Right-to-use assets 548,990 Nil 5,000 Nil 553,990
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
I have a question. From your answer (image) I did not understand how to get the following data:
1. Present value of Annuity Due at 6%, 10 years is 7.8017.
Present Value at 6%, 10 year is 0.5584
I would be very grateful if you explain how to get it!
thank you!
Assume that on December 31, 2019, Telco Company signs a 10-year, non-cancelable lease agreement to lease a storage building from Redfield Storage. The following information pertains to this lease agreement.
- The agreement requires equal rental payments of €69,223 beginning on December 31, 2019.
- Telco Company incurs initial direct costs of €5,000.
- The fair value of the building on December 31, 2019, is €548,990.
- The building has an estimated economic life of 12 years, a guaranteed residual value of €16,000, and an expected residual value of €10,000. Telco Company
- The lease is non-renewable. At the termination of the lease, the building reverts to the lessor.
- Telco Company incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Telco Company.
Instructions
1. Compute the amount of the lease liability and right-of-use asset for Telco Company.
2. Prepare the
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