General Accounting Kingston Corporation enters into a lease on January 1, 20X3that is accounted for as a capital lease. The lease requiresquarterly payments of $18,000, starting on January 1, 20X3, andcontinuing for 4 years. The last payment is due on October 1,20X6. The lease has an implicit annual interest rate of 6%.The present value of an annuity due:• At 6% per year for 4 years is 3.465.• At 1.5% per period for 16 periods is 13.590.What amount will Kingston Corporation report as a leaseobligation on its financial statements dated December 31,20X3?Options:A. $244,620B. $243,500C. $245,000D. $242,800

Step 1: Define Present Value of an Annuity DueThe present value of an annuity due is the current…

Answered: Kingston Corporation enters into a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 1P

See similar textbooks

Similar questions

Lessee Company enters into a lease on January 1, 20X2 that is accounted for as a capital lease. The lease calls for quarterly payments of $15,000, beginning on January 1, 20X2, and continuing for 5 years. The last payment is due on October 1, 20X6. The lease has an implicit annual interest rate of 8%. The present value of an annuity due: -At 8% per period for 5 periods is 4.312. -At 2% per period for 20 periods is 16.678. What amount will Lessee report as a lease obligation on its financial statements dated December 31, 20X2? A. $203,657 B. $200,000 C. $208,968 D. $198,720 On January 1, 2016, Blaugh Co. signed a long-term lease for an office building. The terms of the lease required Blaugh to pay $10,000 annually, beginning December 30, 2016, and continuing each year for 30 years. The lease qualifies as a capital lease. On January 1, 2016, the present value of the lease payments is $112,500 at the 8% interest rate implicit in the lease. In Blaugh's December 31, 2016 balance sheet, the…
Need Help.
None
Lessee Company enters into a lease on January 1, 2024, that is accounted for as a finance lease. The lease calls for quarterly payments of $20,000, beginning on January 1, 2024, and continuing for 5 years. The last payment is due on October 1, 2028. The lease has an implicit annual interest rate of 10%. The present value of an annuity due at 10% per period for 5 periods is 4.170; the present value of an annuity due at 2.50% per period for 20 periods is 15.979. What amount will Lessee report as a lease payable (not including accrued interest) in its balance sheet on December 31, 2024? Multiple Choice $416,987 $261,102 $319,580 $247,630 $416,987
On June 30, Year 1, a company signs a lease requiring quarterly payments each year for the next five years. Each of the 20 quarterly payments is $29,122.87, with the first lease payment beginning September 30. The company’s normal borrowing rate is 6%. Use PVA of $1. (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)Required: What is the PV of lease payment. Record the lease on June 30, year 1.
A finance lease agreement calls for quarterly lease payments of $7,728 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 $184,000. 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 Lease Payment Effective Interest Decrease in balance Outstanding balance July 1 July 1 October 1
A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $150,000. 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 ARequired 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? Interest expense (Lessee) Interest revenue (Lessor) K Required A
A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the firstpayment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the leasepayments and the cost of the asset to the lessor are $150,000. What would be the amount of interest expense thelessee would record in conjunction with the second quarterly payment on October 1? What would be the amountof interest revenue the lessor would record in conjunction with the second quarterly payment on October 1?
A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $150,000. Required: Prepare a partial amortization table up to the October 1 payment. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1?
An asset with a cost of $80,000 is leased on 1/1/x1. The lease is a sales-type lease for the lessor. Six annual lease payments are due on December 31 beginning on 12/31/x1. The asset will have no residual value. The lessor sets a rate of return of 8% and charges the lessee annual lease payments of $20,550. Present value factor of an ordinary annuity for six years at 8% 4.62288 Present value factor of an annuity due for six years at 8% 4.99271 Present value factor of a single sum for a six-year term at 8% .63017 In the journal entry at the inception of the lease under the gross method, what amount does the lessor credit to unearned interest? Group of answer choices A. $28,300 D. $43,300 B. $95,000 C. $123,300
Blossom Company leases a machine from Vollmer Corp. under an agreement which meets the criteria to be a finance lease for Blossom. The six-year lease requires payment of $180000 at the beginning of each year, including $26000 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 11%; the lessor's implicit rate is 9% and is known by the lessee. The present value of an annuity due of 1 for six years at 11% is 4.69590. The present value of an annuity due of 1 for six years at 9% is 4.88965. Blossom should record the leased asset at $880137. O $723169. $753006. O $845262.
Cop

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS