On January 1, 2016, Oxley Corporation leased equipment to Bells Company. The lease term is 12 years. The first payment of $706,000 was made on January 1, 2016. The equipment cost Oxley Corporation $5,110,500. The present value of the minimum lease payments is $5,510,500. The lease is appropriately classified as a sales- type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Oxley record in 2017 on this lease? (Round your answer to the nearest dollar.) a. $273,595. b. $403,291. c. $432,405. d. $407,781.

On January 1, 2016, Oxley Corporation leased equipment to Bells Company. The lease term is 12 years. The first payment of $706,000 was made on January 1, 2016. The equipment cost Oxley Corporation $5,110,500. The present value of the minimum lease payments is $5,510,500. The lease is appropriately classified as a sales- type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Oxley record in 2017 on this lease? (Round your answer to the nearest dollar.) a. $273,595. b. $403,291. c. $432,405. d. $407,781.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 5RE: Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the...

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On June 30, 2016, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2016. Georgia-Atlantic’s incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year. The fair value of the warehouse is $3 million. Required: 1. Determine the present value of the lease payments at June 30, 2016 (to the nearest $000) that Georgia-Atlantic uses to record the leased asset and lease liability. 2. What amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2016 (ignore taxes)? 3. What amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2016 (ignore taxes)?
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On January 1, 2021, Packard Corporation leased equipment to Hewlitt Company. The lease term is 9 years. The first payment of $458,000 was made on January 1, 2021. Remaining payments are made on December 31 each year, beginning with December 31, 2021. The equipment cost Packard Corporation $2,705,847. The present value of the lease payments is $2,733,179. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 12%, what will be the balance reported as a liability by Hewlitt in the December 31, 2022, balance sheet? (Round your final answer to nearest dollar.) Multiple Choce $1,883,024. $2.275,179. $1,613,024. $2.090,200.