Hello Tutor please solve this for me N Corp. entered into a nine-year capital lease on a warehouse onDecember 31, 2013. Lease payments of $34,000, which includesreal estate taxes of $1,500, are due annually, beginning onDecember 31, 2014, and every December 31 thereafter. N Corp.does not know the interest rate implicit in the lease; N'sincremental borrowing rate is 11%. The rounded present valueof an ordinary annuity for nine years at 11% is 6.What amount should N report as capitalized lease liability atDecember 31, 2013?a. $204,000.b. $292,500.c. $195,000.d. $306,000.

Step 1: Definition of Capital lease:A capital lease is not a typical type of lease where the lease…

Answered: N Corp. entered into a nine-year…

Principles of Accounting Volume 2

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Chapter11: Capital Budgeting Decisions

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Problem 7MC: Using the information provided, what transaction represents the best application of the present...

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At the beginning of the current year, Ashe Company entered into a ten-year noncancelable lease requiring year-end payments ofP1,000,000. Ashe’s incremental borrowing rate is 12%, while the lessor’s implicit interest rate, known to Ashe, is 10%. Present value factors for an ordinary annuity for ten periods are 6.145 at 10% and 5.650 at 12%. On the same date, Ashe Company paid the initial direct cost of P200,000 to negotiate and secure the leasing agreement. Ownership of the property remains to the lessor at the expiration of the lease. The leased property has an estimated economic life of 12 years. 1. What amount should be capitalized as cost of the Right to Use Asset?a. 6,145,000b. 6,345,000c. 5,650,000d. 5,850,000 2. What is the depreciation for the current year?a. 614,500b. 634,500c. 528,750d. 565,000 3. What is the lease liability at the end of the current year?a. 5,328,000b. 5,552,000c. 5,759,500d. 5,979,500
On January 1, 2020, Dan Co. entered into a ten-year noncancelable lease lease requiring year-end payments of P 1,000,000. Dan's incremental borrowing rate is 12%, while the lessor's implicit interest rate, known to Dan, is 10%. PV factors for an ordinary annuity for ten periods are 6.145 at 10%, and 5.650 at 12%. On the same date, Dan Co. paid initial direct cost of P 200,000 in negotiating and securing the leasing arrangement. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should be recognized initially as lease liability?
On January 1, 2020 , Athena Company entered into a ten-year noncancelable lease requiring year-end payments of P 1,000,000. Athena's incremental borrowing rate is 12%, while the lessor's implicit interest rate, known to Athena, is 10%. Present Value factors for an ordinary annuity for ten periods are 6.145 at 10% and 5.650 at 12%. On the same date, Athena Co. paid initial direct cost of P 200,000 in negotiating and securing the lease arrangement. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should be capitalized initially as cost of the leased property?
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Ivanhoe Company leases a machine from Vollmer Corp. under an agreement which meets the criteria to be a finance lease for Ivanhoe. The six-year lease requires payment of $172000 at the beginning of each year, including $25200 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 10%; the lessor’s implicit rate is 8% and is known by the lessee. The present value of an annuity due of 1 for six years at 10% is 4.79079. The present value of an annuity due of 1 for six years at 8% is 4.99271. Ivanhoe should record the leased asset at 824016 858746 732930 703288
On December 31, 2021, Fins signs a four-year truck lease. The truck has a current value of $58,600. Four annual payments of $10,000 will be paid and the first payment will be made on December 31, 2021. After that time, the truck with a previous useful life of 8 years will be returned to the lessor. Fins has an incremental borrowing rate of 6%. The present value of a 4-year annuity payable of $10,000 at an annual rate of 6% is $36,700. The lessor has an implicit annual interest rate of 8% built into the contract. Fins is aware of this implied rate. The present value of a 4-year annuity due for $10,000 at an annual rate of 8% is $35,770. What liability should Fins report on its balance sheet as of December 31, 2021? A) 26,700 B)25,770 C) 10,000 D) 0
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cutiepie Company leased a warehouse from cheescake Company on December 31, 2020. The lease term is for 3 years. The implicit interest rate is 11%. The lease payment is P100,000 payable at the end of each year. The payments are variable upon the consumer price index outstanding at the beginning of each period. The consumer price index oustanding (in millions of PHP) and related incremental borrowing rate at each date are as follows: December 31, 2020 – P100.00 and 12% January 1, 2021 – P100.00 and 12% January 1, 2022 – P98.00 and 13% January 1, 2023 – P105.00 and 9% The carrying value of the lease liability as of December 31, 2022 is?
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On January 1, 2010, Kerr Company leased a machine to Wee Company for six years requiring payments of P100,000 at the beginning of each year. The machine cost P480,000, which is the fair value at the lease date, and has a useful life of eight years with no residual value. Kerr’s implicit interest rate is 10% and present value factors are as follows: Present value of an annuity due of 1 at 10% for 6 periods-4.791Present value of an annuity due of 1 at 10% for 8 periods-5.868Kerr appropriately recorded the lease as a direct financing lease. At the inception of the lease, the gross lease receivable account balance should be a. 600,000 b. 586,800 c. 480,000 d. 479,100
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A company will receive payments of $1,500 per year for the next four years under a subscription contract. The first payment will be made at the beginning of the contract. Assuming an annual interest rate of 3% is appropriate, the present value of an ordinary annuity is 3.71710 x $1,500 = $5,576, and the present value of an annuity due is 3.82861 x $1,500 = $5,743. Which amount must the company record for this sale in accordance with generally accepted accounting principles (GAAP) if collection is reasonably assured? $0 $5,576 $6,000 $5,743

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