Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $90,000. HPB will need it for only 4 years even though the compressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 4 years with $10,000 lease payments at the end of each year. HPB's cost of debt is 12%. Answer the following questions. (Hint: See Table 19-1.) a. What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ b. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent. $ c. What will HPB report as the Year-1 lease expense? Round your answer to the nearest cent. Enter your answer as a positive value. $ d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your ans as a positive value. $ e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent.
Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $90,000. HPB will need it for only 4 years even though the compressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 4 years with $10,000 lease payments at the end of each year. HPB's cost of debt is 12%. Answer the following questions. (Hint: See Table 19-1.) a. What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ b. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent. $ c. What will HPB report as the Year-1 lease expense? Round your answer to the nearest cent. Enter your answer as a positive value. $ d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your ans as a positive value. $ e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent.
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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Question
Transcribed Image Text:Financial Statement Reporting for an Operating Lease
Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $90,000. HPB will need it for only 4 years even though the compressor's
economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 4 years with $10,000 lease payments at the
end of each year. HPB's cost of debt is 12%. Answer the following questions. (Hint: See Table 19-1.)
a. What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the
nearest cent. Enter your answer as a positive value.
$
b. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent.
$
c. What will HPB report as the Year-1 lease expense? Round your answer to the nearest cent. Enter your answer as a positive value.
$
d. What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer
as a positive value.
$
e. What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your
answer as a positive value.
$
f. What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent.
$
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