Lessee Company enters into a lease on January 1, 2024, that is accounted for as a finance lease. The lease callsfor quarterly payments of $20,000, beginning on January 1, 2024, and continuing for 5 years. The last paymentis due on October 1, 2028. The lease has an implicit annual interest rate of 10%. The present value of an annuitydue at 10% per period for 5 periods is 4.170; the present value of an annuity due at 2.50% per period for 20periods is 15.979. What amount will Lessee report as a lease payable (not including accrued interest) in itsbalance sheet on December 31, 2024?Multiple Choice$416,987$261,102$319,580$247,630$416,987

The amount of lease liabilities is calculated by discounting future lease payments to present value…

Lessee Company enters into a lease on January 1, 2024, that is accounted for as a finance lease. The for quarterly payments of $20,000, beginning on January 1, 2024, and continuing for 5 years. The last is due on October 1, 2028. The lease has an implicit annual interest rate of 10%. The present value of a due at 10% per period for 5 periods is 4.170; the present value of an annuity due at 2.50% per period fo periods is 15.979. What amount will Lessee report as a lease payable (not including accrued interest) in balance sheet on December 31, 2024?

Lessee Company enters into a lease on January 1, 2024, that is accounted for as a finance lease. The for quarterly payments of $20,000, beginning on January 1, 2024, and continuing for 5 years. The last is due on October 1, 2028. The lease has an implicit annual interest rate of 10%. The present value of a due at 10% per period for 5 periods is 4.170; the present value of an annuity due at 2.50% per period fo periods is 15.979. What amount will Lessee report as a lease payable (not including accrued interest) in balance sheet on December 31, 2024?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A finance lease agreement calls for quarterly lease payments of $7,728 over a 10-year lease term,…

A: a.DateLease paymentEffective interestDecrease in balanceOutstanding balanceJuly 1 184,000July…

Q: On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a…

A: Lease payments are monthly fees paid to the asset's owner (the lessor) in exchange for the right to…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $25,000 over…

A: A lease is a binding agreement between two parties, one party sells the right to use the asset to…

Q: Assuming the first payment is made on time, the amount that should be reported by Carla Vista…

A: Leasee = Carla Vista Corporation Lessor = Bell Company Lease Term = 7 years Lease Payment ( due on…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over…

A: The lease is an option where one party can take an asset on rent from another party and there is no…

Q: On January 1, 2021, Lang Corporation leased a ship from Fort Company for an eight- year period…

A: A lease is an agreement between the lessor and the lessee. Under this agreement, the lessor offers…

Q: On December 31, 2020, the lessor company leases equipment to the lessee company with 8 equal annual…

A: When an asset is provided by the lessor to the lessee who requires that particular asset, then this…

Q: 1. Determine the present value of the lease payments on June 30, 2024 that Georgia-Atlantic uses to…

A: Lease is a agreement between lessor and lessee where lessor allows lessee to use asset in exchange…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $30,000 over…

A: An organization that signs a lease gets the usage rights over an asset without really owning it. The…

Q: Need Help.

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $30,000 over…

A: A lease is a contractual agreement between two parties, known as the lessor and the lessee, in which…

Q: On June 1, 2024, First National leased a building. The lease agreement calls for First National to…

A: Lease: It implies to a contract where by one party (lessor) agrees to grant the right of using an…

Q: Using an 6 percent interest rate, the present value of the lease payments is $1,950,423. The first…

A: Given information: Interest rate = 6% present value of the lease payments is $1,950,423 Lease…

Q: None

A: Identify the variables:Payment per period (PMT) = $15,000Number of periods (n) = 5 years * 4…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $50,000 over…

A: An agreement of contract that is prepared to transfer the right to use the resources for a…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $20,000 over…

A: A lease is an agreement between two parties in which one party provides assets on rent to another…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over…

A: Lease is a agreement between lessor and lessee where lessor allows lessee to use assets in exchange…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over…

A: A lease is defined as a contractual agreement incorporated between two business entities where one…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $25,000 over…

A: The lease is an option where one party can take an asset for rent from another party and there is no…

Q: On December 31, 2023, SW Airlines leased a plane from FIY Company for a ten-yerr period expiring…

A: To determine the lease liability that SW Airlines should report on its December 31, 2024 balance…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $50,000 over…

A: Lease is an aggreement between lessor and lessee where lessor gives his assets to lessee for use in…

Q: ok nt ences A finance lease agreement calls for quarterly lease payments of $7,056 over a 10-year…

A: Required A: Partial Amortization TableDateLease PaymentEffective InterestDecrease in…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $36,000 over…

A: Lease - It is an agreement between a lessor and a lessee and the lessor gives the lessee the right…

Q: A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over…

A: Step 1:Step 2:

Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

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

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Working notes for the calculation of the lease liability

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On December 31, 2020, Cleeneth Company leased equipment under a finance lease. Annual lease payments of P400,000 are due December 31 for 10 years. The equipment's useful life is 10 years, and the interest rate implicit in the lease is 10%. The lease obligation was recorded on December 31, 2020 at P2,700,000 and the first lease payment was made on that date. What amount should Cleeneth Company include in current liabilities in relation to the finance lease in its December 31, 2020 statement of financial position?
On December 31, 2021, Lang Corporation leased a ship from Fort Company for an eight-year period expiring December 30, 2029. Equal annual payments of $100,000 are due on December 31 of each year, beginning with December 31, 2021. The lease is properly classified as a finance lease on Lang 's books. The present value at December 31, 2021 of the eight lease payments over the lease term discounted at 10% is $586,843. Required: Prepare the journal entry that Lang should record on December 31, 2021.
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 on January 1, the beginning of the lease. The interest rate is 5%. Required: Complete the amortization schedule for the first two payments. 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?
provide please answer
Lessee enters into a 10-year lease of property with annual lease payments of P50,000, payable at the beginning of each year. The contract specifies that lease payments will increase every two years on the basis of the increase in the Consumer Price Index for the preceding 24 months. The Consumer Price Index at the commencement date is 125. The rate implicit in the lease is not readily determinable. Lessee’s incremental borrowing rate is 5 per cent per annum, which reflects the fixed rate at which Lessee could borrow an amount similar to the value of the right-of-use asset, in the same currency, for a 10-year term, and with similar collateral. Discount factor for 5% for 9 periods is 7.10782.Lessee expects to consume the right-of-use asset’s future economic benefits evenly over the lease term and, thus, depreciates the right-of-use asset on a straight-line basis.At the beginning of the third year of the lease the Consumer Price Index is 135.Determine the amount of lease liability…
Cullumber Company signed a lease for an office building for a period of 9 years. Under the lease agreement, a security deposit of $7,200 is made. The deposit will be returned at the expiration of the lease with interest compounded at 6% per year. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What amount will Cullumber receive at the time the lease expires? (Round answer to 2 decimal places, e.g. 25.25.) Amount at the time the lease expires
On December 31, 2020, Roe Company leased a machine from Colt Company for a five-year period Equal annual payments under the lease P1,050,000 including P50,000 annual executory cost and are due on December 31 of each year. The first payment was made on December 31, 2020, and the second payment was made on December 31, 2021. The five lease payments are discounted at 10% over the lease term. The present value of minimum lease payments at the inception of the lease and before the first annual payment was P4,170.000.On December 31, 2021, what amount should be reported as lease liability?
Gadubhai
Sagar