nformation on a lease is as follows: Cost of equipment - P303,735 Useful life of equipment - 5 years Lease term - 4 years Annual rent payable at the end of each year - P100,000 The lessor is not a dealer or manufacturer of equipment. What is the interest rate implicit in the lease?

nformation on a lease is as follows: Cost of equipment - P303,735 Useful life of equipment - 5 years Lease term - 4 years Annual rent payable at the end of each year - P100,000 The lessor is not a dealer or manufacturer of equipment. What is the interest rate implicit in the lease?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

How will a 20-year lease obligation appear on the lessee's statement of financial position? a.as a long-term liability, only if an operating lease b.as a long-term liability, only if a finance lease c.as a long-term liability for any lease, operating or finance d.as a long-term asset for an operating lease
E1.
Please correct solution with explanation and do not provided image format
For which of the following conditions will the lessor classify a lease as a sales-type lease? a.The leased asset may be exchanged for a similar asset during the lease term. b.The present value of the sum of the lease payments is equal to or more than the fair value of the underlying asset. c.The lease term is less than one year. d.The lease term is half of the underlying asset’s economic life.
Use the 5 lease criteria to determine if the following lease qualifies as a Capital, Financing lease. The Sirap Co leased equipment from the lessee valued at $400,000. The lease contract has payments of $50,000 per year payable at the end of each year for 12 years. The interest rate is at 8%. The lessor will repossess the equipment at the end of the lease term. The leased equipment does not have a bargain purchase option. The leased equipment has an economic useful life of 16 years. Required: use the 5 criteria, like in illustration 15 - 4 to determine if the lease qualifies as a Capital, financing lease.
Check my work mode: This shows what is correct or in Each of the four independent situations below describes a sales-type lease in which annual leas the beginning of each year. Each is a finance lease for the lessee. (FV of $1. PV of $1. EVA of $1. (Use appropriate factor(s) from the tables provided.) Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee Unguaranteed Purchase option: After (years). Exercise price Reasonably certain? Situation 1 2 3 4 4 4 4 4 4 5 5 7 11% 11% 11% 11% $4,000 $2,000 e 0 е $2,000 $ 4,000 none 3 4 3 n/a $ 7,000 $1,000 $3,000 n/a no no yes Determine the following amounts at the beginning of the lease: (Round your final answers to nee Answer is complete but not entirely correct. Situation 1 2 3 4 A The lessor's: 1 Total lease payments $ 40,000 $ 44,000 S 42,000 $ 33,000 2 Gross investment in the lease 40,000 44,000 44,000 37,000 × 3. Net investment in the lease 34,437 37,072 37,072 32,244…
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pharoah Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, Lessor's implicit rate Lessee's incremental borrowing rate January 1, $126,840 $55,000 $50,000 6 years 6 years $653,000 9 % 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
For accounting purposes, which one of the following conditions would automatically cause a lease to be classified as a capital lease? Multiple Choice O O O The lessee can purchase the asset at fair market value at the end of the lease. The lease transfers ownership of the asset to the lessee by the end of the lease term. The lease term equals 60 percent or more of the asset's estimated economic life. The present value of the lease payments equals 75 percent of the asset's fair market value at lease inception. The lessor can renew the lease at the end of the lease term.