Martinez Equipment Leasing Company leased equipment to Cullumber Healthcare System on January 1, 2025, for a four-year period.Equal annual payments under the lease are $370000 and are due on January 1 of each year. The first payment was made on January 1,2025. The implicit rate of interest contemplated by Martinez Equipment Leasing and known to Cullumber Healthcare is 8%.Cullumber's incremental borrowing rate is 12%. The cost of the equipment on Martinez Equipment Leasing accounting records was$820000. Assuming that the lease is appropriately recorded as an operating lease, at what amount is the lease recorded on CullumberHealthcare System's books on January 1, 2025?PV Annuity Due PV Ordinary Annuity PV Single Sum8%, 4 periods3.577103.312130.7350312%, 4 periods3.401833.037350.63552no entry to record an operating lease.$1323527$1480000$789167

To calculate the present value (PV) of the lease liability on Cullumber Healthcare System's books,…

Answered: Martinez Equipment Leasing Company…

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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Hayes Corp. is a manufacturer of truck trailers. On January 1, 2021, HayesCorp. leases ten trailers to Lester Company under a six-year noncancelablelease agreement. The following information about the lease and the trailersis provided:1. Equal annual payments that are due on January 1 each year provideHayes Corp. with an 8% return on net investment (present value factorfor 6 periods at 8% is 4.99271).2. Titles to the trailers pass to Lester at the end of the lease.3. The fair value of each trailer is $60,000. The cost of each trailer to HayesCorp. is $54,000. Each trailer has an expected useful life of nine years.4. Collectibility of the lease payments is probable. answer please:1. What type of lease is this for the lessor? Discuss how you made the determination. 2. Calculate the annual lease payment. (Round to nearest dollar.) 3. Prepare a lease amortization schedule for Hayes Corp. for the first three years. 4. Prepare the journal entries for the lessor for 2021 to record the…
Abbott Equipment leased a protein analyzer to Werner Chemical, Incorporated, on September 30, 2024. Abbott purchased the machine from NutraLabs, Incorporated, at a cost of $6 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, and June 30, with the first payment on September 30, 2024. Abbott's implicit interest rate is 12%. The useful life of the equipment is five years. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: What pretax amounts related to the lease would Abbott report in its balance sheet on December 31, 2024? What pretax amounts related to the lease would Abbott report in its income statement for the year ended December 31, 2024? What pretax amounts related to the lease would Abbott report in its statement of cash flows for the year ended December 31, 2024? Complete this question by…
On January 1, Lessee Company leases equipment with a useful life of 5 years for a 3-year lease term. Payments of $52,000 are due at the beginning of each year. The incremental borrowing rate is 3%. The present value of the payments is $151,320. Which of the following is true? Lease expense at the end of the first year is $52,000. Amortization expense at the end of the first year is $151,320 divided by 3. The lease liability at the end of the first year is reduced by $52,000. The ROU asset at the end of the first year is $99,320.
On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semi-annually. Prepare the appropriate entries for both the lessee and the lessor from the beginning of the lease through the end of 2018. Only typing answer Please explain step by step
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On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King's sales revenue, with a quarterly sales minimum of $520,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous five-year period, Taco King has generated quarterly sales of over $710,000. Fogelman's Interest rate, known by Taco King, was 4%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare the journal entries for Taco King at the beginning of the lease on January 1, 2024. 2. Prepare the journal entries for Taco King on April 1, 2024. First quarter sales were $720,000. Amortization is recorded quarterly. es Complete this question by entering your answers in the tabs below. Required Required 2 Prepare the journal entries for Taco King at the beginning of the lease on January 1,…
On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia- Atlantic to make semiannual lease payments of $486,146 over a 4-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic's incremental borrowing rate is 12.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $2.7 million. (EV of $1. PV of $1, EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which Builders is "selling" the equipment (present value of the lease payments) at June 30, 2018. 2. What pretax amounts related to the lease would Builders report in its balance sheet at December 31, 2018? 3. What pretax amounts related to the lease would Builders report in its income statement for the year ended December 31, 2018? (For all requirements, enter your…
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