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 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...

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Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?
Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.
On January 1, 2021, Wise Corporation leased equipment to Slim Company. The lease term is eight years. The first payment of $675,000 was made on January 1, 2021. The equipment cost Wise Corporation $3,600,000. The present value of the lease payments is $3,961,183. The lease is appropriately classified as a sales-type lease. suming the interest rate for this lease is 10%, how much interest revenue will Wise record in 2022 on this lease? A. $261,000. B. $293,980. C. $325,350. D. $328,615.
On June 30, 2018, Georgia-Atlantic, Inc. leased a warehouse facility from IC Leasing Corporation. The leaseagreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year leaseterm, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic’s incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Depreciation is recordedon 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, 2018 (to the nearest $000) that GeorgiaAtlantic uses to record the right-of-use asset and lease liability.2. What amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31,2018 (ignore taxes)?3. What amounts related to the lease would Georgia-Atlantic report in its income statement for the year endedDecember 31, 2018 (ignore taxes)?
On January 1, Year 1, Savor Corporation leased equipment to Spree Company. The lease term is 9 years. The first payment of $698,000 was made on January 1, 2018. The present value of the lease payments is $4,561,300. The lease is appropriately classified as an operating lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Savor record in Year 1 on this lease?
Timmer Company signs a lease agreement dated January 1, 2016, that provides for it to lease equipment from Landau Company beginning January 1, 2016. The lease terms, provisions, and related events are as follows: • The lease is noncancelable and has term of 5 years. • The annual rentals are $83,222.92, payable at the end of each year, and provide Landau with a 12% annual rate of return on its net investment. • Timmer agrees to pay all executory costs at the end of each year. In 2016, these were insurance, $3,760; property taxes, $5,440. In 2017: insurance, $3,100; property taxes, $5,330. • There is no renewal or bargain purchase option. Timmer estimates that the equipment has a fair value of $300,000, an economic life of 5 years, and a zero residual value. Timmer's incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment. Required: 1. Calculate the amount of the asset and liability of…
On June 30, 2018, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The leaseagreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year leaseterm, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic’s incremental borrowing rate is 10%, the same rate IC used to calculate lease payment amounts. IC purchased the warehouse from Builders, Inc. at a cost of $3 million. Required:1. What amounts related to the lease would IC report in its balance sheet at December 31, 2018 (ignore taxes)?2. What amounts related to the lease would IC report in its income statement for the year ended December 31,2018 (ignore taxes)?
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 used to calculate lease payment amounts. IC purchased the warehouse from Builders, Inc. at a cost of $3 million. Required: 1. What amounts related to the lease would IC report in its balance sheet at December 31, 2016 (ignore taxes)? 2. What amounts related to the lease would IC report in its income statement for the year ended December 31, 2016 (ignore taxes)?
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.